I didn't see an English language thread for Venezuela, so I hope this can be a place to exchange information and views.

It's nice to see Denny (captainccs) post. I remember his wisdom on investing and life posted elsewhere. I was concerned for his safety when I saw a gap between posts of Chavez dissent on his site at softwaretimes.com.

I wonder what people in Venezuela can or should do to get their country back, and I wonder what people in the U.S. and other countries can or should do to help.

Here is a Reuters (English) version of the Douglas Barrios story since I can't read the Spanish version. Click on the link to include the protest photo with the story.

Thousands of students and university rectors and professors march for freedom of expression in Caracas. (Photo)

CARACAS—Students took their 11-day-old protest over President Hugo Chavez's shutdown of the last nationwide opposition television station to Venezuela's Congress on Thursday, in a rare appearance by the opposition in the legislature.

Addressing the 167-member body, where there have been no opposition lawmakers since 2005, student leader Douglas Barrios said daily demonstrations against the closure of RCTV would continue.

"Today our classes are in the street," he said in remarks that were broadcast nationally.

At one point, Barrios took off his T-shirt in the signature red of Chavez, saying Venezuelans could refuse to wear the government uniform—a reference to the opposition's charge that Chavez intimidates people into displaying support for him.

The closing has become the rallying cry for a nascent pro-democracy student movement that critics of the president hope can help fill a void left by a weak opposition in the polarized OPEC nation.

Congress, which has granted Chavez the power to rule by decree, organized a debate over the station's closure between pro- and anti-government students and the government required all Venezuelan television and radio to broadcast the session.

The anti-Chavez students—part of a mainly middle-class movement that has at times drawn tens of thousands onto the streets—walked out after the first pro-government speech, complaining the event was politicized.

They were escorted past Chavez supporters outside by security forces with anti-riot shields. Some were driven off in a troop carrier.

From what I understand, all that's happened here is that RCTV's broadcast license expired and the Venezuelan government chose not to renew it. Under Venezuelan law, the government is empowered to grant or deny a private broadcast corporation the right to use public airwaves to the extent that such use benefits the public. RCTV has not been disbanded, it's directors have not been arrested or jailed, and it's equipment/assets have not been seized. The station is still free to broadcast on cable or satellite, and retains the right to broadcast on it's two radio stations. I can understand disagreeing with the decision, but IMO it clearly doesn't qualify as a threat to free expression.

It's also worth noting the Chavez government's official, stated reason for the decision, which was RCTV's direct support for an illegal coup attempt back in 2002. First, they deliberately broadcast a report stating that gunfire that claimed the lives of at least 18 people and wounded another 150 was the work of pro-Chavez thugs (this was actually used as the pretext for the coup), when in fact the people who'd been shot and wounded (by snipers) were actually Chavez supporters trying to defend the presidential palace against the opposition demonstration. Second, they reported that Chavez had voluntarily resigned, when in fact he had been kidnapped and was being held prisoner at a military base. Then when it turned out that the coup had almost no popular support (evinced by hundreds of thousands of Venezuelans demonstrating in opposition to it and demanding that Chavez be reinstated), RCTV just stopped broadcasting news altogether and instead showed cartoons and old movies.

Two other major private broadcasters in Venezuela, Venevision and Globovision, were considered more or less equally supportive of the 2002 coup. Globovision was the Venezuelan affiliate of CNN, which in April 2002 turned over its airwaves to Admiral Hector Ramirez, then chief of the Venezuelan navy, to broadcast an appeal to all military personnel to join the coup. Both of them retain their broadcast licenses.

Also FWIW, two of our allies in the "war on terror", Pakistan and Peru, have similarly ordered transmissions blocked and/or revocation of broadcast licenses from TV stations for purely political reasons (in Pakistan it was a station's criticism of Musharraf's decision to remove the Chief Justice, in Peru it was a station's support for a labor strike), and this evoked no comment whatsoever from the same Bush administration.

The key phrase to me was not the news in the news story, that the opposition was voicing opposition, it was the background information that concerns me:

"Congress, which has granted Chavez the power to rule by decree..."

I will look into the points you made and I hope others will post, especially Denny, who is there. By his cartoon post that shows Chavez speaking on all channels, I don't think he agrees with you, but hopefully we will get a first-hand account in his own words.

Yeah, I won't say I love Chavez or "rule by decree", but I believe in being honest. Simply refusing to renew RCTV's broadcast license sounds like something the government was well within it's authority to do and does not constitute an attack on free speech.

A very concise timeline reply to rogt about the April 11, 2002 events:

1.- There was a peaceful march that was not supposed go to Miraflores, our White House2.- Somehow the crowd changed its mind and headed for Miraflores3.- The Plan "Avila" designed by Chavez included firing on the civilians by the military4.- When the march reached Puente Llaguno, the bolivarian circles fired on the crowd. A photographer friend of mine was there and I have his first hand eye witness account.5.- Chavez ordered the National Guard to fire on the civilians6.- The National Guard refused to follow the order and the military arrested Chavez and asked for his resignation, which he gave.7.- The Opposition committee (Carmona et al) moved into Miraflores and was sworn in as the "government"8.- Carmona read the most ridiculous decree that I have ever heard in my life dissolving all constituted authority and changing the country's name back to what it had been before Chavez changed the constitution.9.- Hearing such idiocy, the military backtracked and brought Chavez back.

This was a terrible waste of a great opportunity to be rid of Chavez but the opposition really, really messed up. Over the next four years the political opposition to Chavez made the Keystone cops look good. Totally incompetent for the job at hand (removing Chavez), corrupt as always and wanting to split a pie that was not theirs to split. "We, the people" didn't want Chavez and we didn't want the opposition political parties either. A boat without direction is the best way to describe the opposition at the time.

In the poorer sections of the population there was quite a bit of support for Chavez, not so much because he was good but because returning to the old political parties was even worse.

Things were moving along without much hope for the opposition and with Chavez tightening the screws. You might remember the show he put on in the United Nations where he did not get his way. But he did buy a lot of international support by giving away our wealth. Socialists like Lula of Brazil and Kirchner from Argentina, who benefitted handsomely from his handouts, were stalwart supporters.

About the closing of RCTV:

Over the last 5 or 6 years, Chavez has been threatening business giving them the choice to sell out half to Chavez backers or to be shut down. Most complied. You have to understand Venezuelan history to understand why most businesses accepted. In a way it is very similar to how the German businesses buddied up to Hitler, better half a business than none at all.

Marcel Granier refused to cut a deal with Chavez and Chavez did not allow his license to be renewed. How legal as it? Legal on he surface in a country where the military, the executive, the legislative and the judicial powers all kowtow to Chavez. BTW, Chavez also nationalized the only private electric utility we had and the major telco. You might also have read about what has been happening to the foreign oil companies operating here.

The real question is why the students are protesting the closing of this business while they didn't protest the closing of other businesses. RCTV happens to be the major source of popular and free entertainment in Venezuela. All of a sudden all the soap operas are gone. Overnight all your favorite comedy shows are gone. All of a sudden they wake up to reality: This is a dictatorship and they want to Cubanize Venezuela. Think of this like you might think about the Boston Tea Party.

So what is different this time?

That the opposition is not the tired old political parties. It is a virgin force of young people who want to smell the roses. The speech at the National Assembly was absolutely spectacular. The way the students avoided the trap that the National Assembly set for them was incredibly masterful. The students had asked for the right to address the National Assembly. The Assembly granted the request but changed the rules, they organized a debate between the opposition students and the Bolivarian students. The opposition students refused the debate in the National Assembly. They told the Assembly that they would be most happy to debate but on their own terms: on the streets, in the barrios, in the universities, but not in the National Assembly.

Those of you who speak Spanish, I urge you to listen to the speech, it's on the index page of my website:

I have no idea where this will lead but the student body has been magnificent. Compared to the old opposition and compared to the people in government, their intellectual level, their smarts, is proving to be superior. There are a lot of Venezuelans in exile. All the old PDVSA professionals have gotten jobs all over the world. A great many journalists are living in exile to avoid being jailed (yes, this is a dictatorship). There is a web-radio in Miami where people can call in and I listen to it all the time. The mood has changed. While 3 and 4 years ago people were afraid for their lives and the lives of their children, now there is more defiance and less fear. Three or four years ago the opposition was mostly middle class even if all anti Chavez Venezuelans were victimized. Now everyone can see the situation more clearly. You are either with Chavez or you are going to have a very hard time.

Getting back to what Denny (Captainccs) wrote, thank you very much for the first hand explanation. Your recap of recent history is very helpful.

My understanding and recollection is that the recall vote was going against Chavez 40-60 in exit polls but tht Chavez vote won by 60-40on the state count,a 40 point swing. International observer Jimmy Carter declared the results good to go. Then-Secretary of State Colin Powell quickly recognized the result.

Curious what your take on that was and wondering if anyone has seen Powell express any second thoughts.

Proposals for the unlimited reelection of President Hugo Chávez, the possibility of establishing a Cuba-like political system and the ''violent'' clash with Washington are rejected by most Venezuelans, according to a new poll unveiled Friday.

The poll by Hinterlaces, a Caracas think tank that carries out surveys and analysis for private clients, also showed that Chávez's popularity has dropped 13 points since November, from 52 percent to 39 percent.

Hinterlaces' figures indicated that the average Venezuelan is increasingly rejecting Chavismo's ideological agenda in key areas such as the rights of private property and the country's shift toward Cuban-style socialism.

''More than a revolution, what Venezuela is living is a process of democratic maturation and the remodeling of its political culture,'' said Oscar Schemel, president of Hinterlaces, which correctly predicted Chávez's landslide reelection in December.

The political interests of today's Venezuelans are ''the opposite of extremist speeches'' not only by Chávez, but also by his radical opposition, Schemel added.

He said Chávez's radical stances ''seem to run counter to the key ideas and meanings of the sociopolitical culture of Venezuela'' and are generating resistance among Venezuelans.

The latest Hinterlaces poll, which consulted 990 people in five major Venezuelan cities in May and June, showed the following results:

Since his December reelection the leftist Chávez has stepped up his efforts to move Venezuela toward ''21st century socialism'' and pushed for a constitutional change to allow unlimited presidential reelection.

The rejection of Chávez's ideological agenda shown in the polls ''has been consistent in the nine years of Chávez government,'' said Carlos Escalante, director of the Miami-based Inter-American Center for Political Management.

Escalante added, however, that he found it paradoxical that ``people don't want to look like Cuba, and prefer private property and keeping their freedom, yet each day the positive evaluation of Chávez remains high.''

The poll's release came one day after the pro-Chávez president of the national legislature, Cilia Florez, attacked what she called an attempt to ''manipulate the proposal for presidential reelection,'' saying it was not for indefinite reelection but rather ''continuous'' reelection.

''If a president has been running a country correctly and the people are satisfied with that rule, we cannot take away their opportunity to reelect that president,'' Florez said at a news conference.

This week oil experts agreed on one point: a favorable outcome of the crisis Venezuela’s state-owned oil company is going through is far from certain.

It looks as though the absence of trained technical and management staff, the lack of planning and the politicization of the business, added to widespread corruption, will push PDVSA into bankruptcy sooner rather than later.

The symptoms are already apparent: PDVSA is not meeting its production expectations, the refineries are in a calamitous state, a large number of wells have been shut down, there is a deficit of some 120 drilling rigs, and production barely reaches 3,300,000 b/d (according to inflated official figures), a far cry from the production goal of 5,800,000 b/d.

Added to this is the fact that Venezuela is apparently on the threshold of an international lawsuit with ConocoPhillips and ExxonMobil, if the clear contradictions between statements by John Lowe, ConocoPhillips’ Exploration and Production Executive Vice- president, and Energy and Oil Minister Rafael Ramírez are anything to go by.

This Wednesday Lowe stated that ConocoPhillips had agreed with the Venezuelan government that compensation for its shares in Petrozuata and Hamaca would be based on their “market value” and that negotiations were still being conducted to determine that “value.” Then, on August 30, Minister Ramírez declared that Venezuela would only pay compensation based on the “original book value.”

According to estimates by analysts with investment banks in New York, the difference between the two values is considerable. The “original book value” of the four upgraders is around $17 billion, whereas the “fair market value” would be in the order of $33 billion.

Although ExxonMobil has not said whether it has reached an agreement similar to ConocoPhillips’, it is to be assumed that it did.

ConocoPhillips and Exxon have already declared losses for the second quarter of some $5.25 billion (ConocoPhillips $4.5 billion and Exxon (Cerro Negro) $750 million). If these losses reflect the “original book value,” then the “market value” could be in the order of $10 billion, at least. Venezuela does not have that amount available and what is most likely is that Chávez will not accept paying such a high sum to oil companies of the empire.

And to complicate things still further for PDVSA, the most important of its deals with China and Brazil are apparently falling through. What is more, Chávez’ promises to build refineries all over the place are on the way to becoming empty words owing to the lack of funds, unless he sells off other assets, Citgo for example, in order to be able to make good his promises.

Unfortunately, the only things that do seem to be functioning at PDVSA are communist proselytism led by Ramírez and corruption at the highest levels, which has been extensively reported by journalists who support the regime and revealed in the scandal of the briefcase with nearly $800,000 confiscated in Buenos Aires.

E-MAIL STORYPRINTER FRIENDLY VERSIONCARACAS, Venezuela — President Hugo Chavez threatened on Monday to take over any private schools refusing to submit to the oversight of his socialist government, a move some Venezuelans fear will impose leftist ideology in the classroom.All Venezuelan schools, both public and private, must submit to state inspectors enforcing the new educational system. Those that refuse will be closed and nationalized, Chavez said.A new curriculum will be phased in during this school year, and new textbooks are being developed to help educate "the new citizen," added Chavez's brother and education minister Adan Chavez in their televised ceremony on the first day of classes.Just what the curriculum will include and how it will be applied to all Venezuelan schools and universities remains unclear.But one college-level syllabus obtained by The Associated Press shows some premedical students already have a recommended reading list including Karl Marx's "Das Kapital" and Fidel Castro's speeches, alongside traditional subjects like biology and chemistry.The syllabus also includes quotations from Chavez and urges students to learn about slain revolutionary Ernesto "Che" Guevara and Colombian rebel chief Manuel Marulanda, whose leftist guerrillas are considered a terrorist group by Colombia, the U.S. and European Union./**/ Venezuelan officials defend the program at the Latin American Medical School — one in a handful of state-run colleges and universities that emphasize socialist ideology — as the new direction of Venezuelan higher education."We must train socially minded people to help the community, and that's why the revolution's socialist program is being implemented," said Zulay Campos, a member of a Bolivarian State Academic Commission that evaluates compliance with academic guidelines."If they attack us because we're indoctrinating, well yes, we're doing it, because those capitalist ideas that our young people have — and that have done so much damage to our people — must be eliminated," Campos said.Now some critics worry that primary and secondary schoolchildren will be indoctrinated as well.Chavez's efforts to spread ideology throughout society is "typical of communist regimes at the beginning" in Russia, China and Cuba — and is aimed at "imposing a sole, singular vision," sociologist Antonio Cova said.But Adan Chavez said the goal is to develop "critical thinking," not to impose a single philosophy.More than eight years after President Chavez was first elected, the curriculum at most Venezuelan schools remains largely unchanged, particularly in private schools commonly attended by middle- and upper-class children.Anticipating criticism, Chavez noted that a state role in regulating education is internationally accepted in countries from Germany to the United States.Chavez said all schools in Venezuela must comply with the "new Bolivarian educational system," named after South American liberation leader Simon Bolivar and Chavez's socialist movement.Discussing the new curriculum, he said it would help students develop values of "cooperation and solidarity" while learning critical reflection, dialogue and volunteer work.Previous Venezuelan educational systems carried their own ideology, Chavez said. Leafing through old texts from the 1970s during his speech, he pointed out how they referred to Venezuela's "discovery" by Europeans."They taught us to admire Christopher Columbus and Superman," Chavez said.Education based on capitalist ideology has corrupted children's values, he said. "We want to create our own ideology collectively — creative, diverse." Chavez said Venezuelans — not Cubans as opponents suggest — have been drawing up the new curriculum, but added that Venezuela could always accept Cuban help in the future.Venezuela has more than 160 universities and colleges, most of which maintain their independence. Leftist ideology is already part of the curriculum at seven different state universities. But encouraging students nationwide to read up on Guevara, Castro and Friedrich Engels' speech before Marx's tomb would be something new entirely.About 20 of the 400 foreign pre-med students have dropped out of the Latin American Medical School near Caracas. Among them was Gabriel Gomez Guerrero, 22, of Colombia, who was shocked that the syllabus counts Marulanda among "important Latin American thinkers" to be studied. The head of the Revolutionary Armed Forces of Colombia is his government's public enemy No. 1."They aren't going to introduce that man to me as a 'Latin American thinker,'" Gomez said. "They may brainwash other people, but not me."School director Sandra Moreno said nobody is being brainwashed — the idea is simply to provide a foundation in Latin American affairs. And Ana Montenegro, a program coordinator who helped create the syllabus, said it was a mistake to describe Marulanda that way, but that the course program will continue to evolve and improve.Many of the remaining students describe themselves as socialists and say no one is pressuring them."They don't impose what we have to learn," said Roberto Leal, a 30-year-old Brazilian. "If we don't agree with something, we express our opinion."/**/

Venezuela: Security Takes a BackseatstratforThe new Italian ambassador to Venezuela made headlines this week after he put President Hugo Chavez on the spot by expressing concern about the country's poor security situation. The same day, Chavez also met with incoming U.S. Ambassador Patrick Duddy, who urged greater bilateral cooperation on combating drug traffickers operating in the country.

Given that Venezuela has a large Italian expatriate population and that approximately half of the drugs shipped through the country are destined for the United States, both Rome and Washington have a strong interest in Venezuela's security situation. The country's violent trends have little chance of reversing, however, unless the government makes a more serious effort to intervene.

Although Chavez rarely publicly discusses the country's soaring crime rates and official statistics on crime are closely guarded, the Venezuelan capital has become extremely violent. Indeed, recent estimates of its homicide rate -- if accurate -- would place Caracas among the most dangerous cities in the world. These estimates are speculative, however, since the Venezuelan government stopped releasing official homicide rates in 2003 -- after the number of killings reached nearly 12,000 countrywide that year. Unofficial estimates for 2006 put the number of homicides in Caracas alone at 6,000 -- more than 100 slayings per 100,000 inhabitants. (By comparison, in 2006 there were 47.3 slayings per 100,000 inhabitants in Detroit, the U.S. city with the highest homicide rate.)

And the homicide rate is just one of Venezuela's security problems. Since the government curtailed its cooperation with foreign governments on counternarcotics, South American drug traffickers face less police scrutiny in Venezuela than they do in other countries. Venezuela, for example, suspended its cooperation with the U.S. Drug Enforcement Administration (DEA) in 2005 after Caracas accused the agency of spying on behalf of the United States. International cooperation is crucial in dealing with issues such as drug trafficking, given that illegal shipments pass through multiple borders on their way from production to market.

Compounding the problems is the country's endemic corruption, which in the law enforcement realm extends from police on the street to the courts. In an October interview, Venezuelan Attorney General Isaias Rodriguez tried to downplay claims that the country's judicial system is incapable of effectively dealing with drug traffickers, though he acknowledged corruption among security forces, prosecutors and judges.

Security is not much better outside the capital, especially along Venezuela's extensive land border with Colombia, where guerrilla groups have been known to move freely between the two countries. The U.S. government, in fact, has warned Americans not to travel within a 50-mile area along the entire Venezuelan-Colombian border. Official corruption is a particular problem in this area as well, considering that one of the most notorious Venezuelan groups linked to Colombian guerrillas -- the Cartel of the Suns -- allegedly is run by Venezuelan National Guard generals. (The group's name comes from the insignia worn on the officers' uniforms.) According to DEA estimates, the group moves up to 5 tons of illegal drugs per month from Colombia into Venezuela. Venezuela has long been used as a transshipment hub for narcotics smuggling and as a gateway in the Americas for illegal aliens attempting to reach the United States from Asia and the Middle East.

In addition to drug trafficking, organized crime groups in Venezuela have found kidnapping to be an increasingly lucrative business. According to the U.S. Embassy in Caracas, more than 1,000 kidnappings were reported from August 2006 to August 2007, and at least 45 foreigners were kidnapped during the first eight months of 2007. This is a particular threat in a country where foreign energy companies have a large presence, though kidnapping gangs do not appear to target one business sector over another. Any company that likely carries kidnapping and recovery insurance on its employees is considered a choice target. Several high-profile kidnapping incidents in recent years have led to demonstrations by citizens demanding greater security. One of the most widely reported cases among Venezuela's Italian community -- and reportedly an incident that the Italian ambassador discussed with Chavez -- was the March 2006 abduction and killing of a prominent Italian businessman. The incident was followed just a few days later by the killing of three Canadian-Venezuelan children who had been kidnapped in February. The children were slain when their family was unable to pay the multimillion-dollar ransom demanded by the kidnappers.

There also is a political aspect to kidnapping cases, as the wealthy victims are often viewed as capitalists -- people considered at odds with the goals and ideals of Chavez's Bolivarian Revolution. Because of this, victims and their families often do not receive sympathetic treatment from the authorities when such crimes are reported.

So far, the Chavez government's efforts to counter the trends of violence throughout the country have been minimal. Investigation of such crimes has been characterized by the U.S. Embassy as "haphazard and ineffective." In the case of high-profile killings, authorities reportedly round up suspects quickly, but rarely produce evidence linking any of the detainees to the crime. Only a small percentage of criminals is ever tried and convicted. Moreover, violent crimes frequently occur during daylight hours and even in public areas such as Caracas' Maiquetía Airport and in popular tourist attractions, such as the Avila National Park.

Further complicating matters are reports that security forces and parts of the judicial system have become increasingly politicized as a result of the government's practice of keeping and promoting officials for their loyalty to Chavez's Bolivarian ideals rather than their interest in, or their ability to fight, crime. These politicized officials also have hesitated to root out police corruption or crack down on criminals in poor areas -- where most of them live and operate -- because such areas are bastions of Chavez supporters. Additionally, the recent crackdowns on student protesters suggest the government is heavily focused on using security forces to quell its opposition rather than to fight crime. In July, Chavez chided student groups protesting constitutional reforms aimed at consolidating his power, calling the students patsies of the United States. On Nov. 1, police dispersed student demonstrators with tear gas and water cannons. Should the protests continue, the government will dedicate even more of its security forces to this area.

Many of Venezuela's security problems are not unique in Latin America. Police corruption, drug trafficking and kidnapping are prevalent elsewhere, particularly in Brazil, Colombia, Guatemala and Mexico. However, the government's weak response to date and its focus on suppressing any opposition suggest the security environment in Venezuela will continue to deteriorate.

Venezuelan college students continued their protests Nov. 8 despite armed attacks on protesters at various universities ahead of a controversial referendum Dec. 2. Though the protests show little sign of letting up and enjoy support from the Roman Catholic Church and at least some military elements, Venezuelan President Hugo Chavez is in a good position to deal with the threat to his rule.

Analysis

University students in Caracas protested Nov. 8 against Venezuelan President Hugo Chavez, just one day after masked gunmen attacked students in the Venezuelan capital returning from a demonstration, injuring at least eight people. The Central University of Venezuela (UCV) would not confirm whether anyone had died. Five students were also injured during protests by plainclothes gunmen in the northwestern city of Barquisimeto on Nov. 7. The Nov. 7 shootings were not the first of their kind. At least one female student died and two others were seriously injured at the University of Zulia on Nov. 2 when armed men fired from a moving vehicle upon a group of protesting students. A deadly shooting also occurred Nov. 2 at the University of Lara, according to an unconfirmed report.

Chavista elements aiming to quell student protests through intimidation tactics likely carried out these attacks. And though the protests probably will continue and could appeal to a wider audience, Chavez has had a long time to prepare for just this sort of situation.

The tactics have met with varying levels of success. While some major student groups like the Federation of Student Centers at UCV have called off protest marches in the interest of protecting students in the wake of the shootings, others have continued to hold marches and to face off with government troops.

Overall, the protests against Chavez still show little sign of easing as the country heads towards an extremely controversial Dec. 2 referendum. At stake are a slew of constitutional reforms that would reinforce Chavez's grip on power, including provisions for the elimination of presidential term limits, for curbs on press freedoms and for extraordinary arrests during emergency rule in the name of the "Bolivarian Revolution."

Though Chavez's constitutional reform campaign has galvanized the country's university students, prompting them to take to the streets despite threats of violence, the protest movement still lacks enough heft to challenge the Chavez regime seriously. For regime change to take place in Caracas, the student activists need the support of the Roman Catholic Church and the poor -- who comprise a majority in Venezuela -- to break through Chavez's lines of defense. The church has joined the students. But the impoverished masses still lack an incentive to join the opposition -- and with oil prices soaring, Chavez has enough cash to buy their political support.

That leaves the military's loyalties as the remaining question. Some sparks from the military establishment flew over Chavez's reforms Nov. 6 when retired Defense Minister Gen. Raul Isaias Baduel called on Venezuelans to vote "no" to the Dec. 2 referendum. Chavez subsequently branded Baduel a traitor. Baduel is an old friend of Chavez who helped restore the Venezuelan president to power after a brief coup in 2002. For a member of Chavez's inner circle to break so publicly with the Venezuelan leader is a worrying sign for Chavez's ability to hold things together. But Chavez has long prepared for such eventualities with the buildup of his personal militias, and so far it does not look as if Baduel has enough support within the military to turn the tide against Chavez.stratfor

Under the anti-globalization president, Venezuela has become a haven for global crime.By Moises Naim November 10, 2007While President Hugo Chavez has been molding Venezuela into his personal socialist vision, other transformations -- less visible but equally profound -- have taken hold in the country.

Venezuela has become a major hub for international crime syndicates. What attracts them is not the local market; what they really love are the excellent conditions Venezuela offers to anyone in charge of managing a global criminal network.

A nation at the crossroads of South America, the Caribbean, North America and Europe, Venezuela's location is ideal. Borders? Long, scantly populated and porous. Financial system? Large and with easy-to-evade governmental controls. Telecommunications, ports and airports? The best that oil money can buy. U.S. influence? Nil. Corrupt politicians, cops, judges and military officers? Absolutely: Transparency International ranked Venezuela a shameful 162 out of 179 counties on its corruption perception index. Chavez's demonstrated interest in confronting criminal networks during his eight years in power? Not much.

While this situation has so far been rather invisible to the rest of the world, it is patently clear to those in charge of fighting transnational crime. Anti-trafficking officials in Europe, the United States, Asia and other Latin American countries are paying unprecedented attention to Venezuela. These officials are not particularly interested in Venezuelan politics or in Chavez's policies. All they care about is that the tentacles of these global criminal networks are spreading from Venezuela into their countries with enormous power and at great speed.

The numbers speak volumes: About 75 tons of cocaine left Venezuela in 2003; it is estimated that 276 tons will leave the country this year. Before, the main destination was the United States; now, Europe is increasingly the target. Italy and Spain are two new important and lucrative end-user markets, and earning in euros is undeniably better than getting paid in dollars these days.

A senior Dutch police officer told me that he and his European colleagues are spending more time in Caracas than in Bogota, Colombia, and that the heads of many of the major criminal cartels now operate with impunity, and effectiveness, from Venezuela. The cartel bosses aren't exclusively Colombians -- there are Asians (especially Chinese) and Europeans too. Caracas' most posh neighborhoods are home to important kingpins from around the world, including some from Belarus, a country that Chavez notably has visited several times.

Venezuela appears near the top of lists compiled by the anti-money-laundering authorities as well. Money moves in and out, and not just through electronic inter-bank transfers. The combination of private jets, suitcases full of cash and diplomatic immunity has opened up new possibilities. Recently, one Venezuelan member of the boliburguesía -- the new mega-rich -- was caught carrying at least one suitcase full of money. He was discovered by a customs officer in Buenos Aires but not arrested. Turns out he was traveling on an executive jet with senior members of the government of Argentina's president, Nestor Kirchner.

In Uruguay, an outraged legislator dropped this bombshell a few weeks ago: A group of Venezuelans had engineered the sale of Iranian arms and munitions to his country, using Venezuelan companies as a cover to bypass the U.N. embargo on Iran's arms trade. Likewise, the guerrillas in Colombia seem to have no trouble acquiring weapons -- many of which come through Venezuela-based arms dealers.

Diamond traders are doing equally well. "Venezuela is allowing massive smuggling of diamonds," stated a recent report by Global Witness and Partnership Africa, two respected nongovernmental organizations. They recommended that Venezuela be expelled from the Kimberley Process, the U.N.-sponsored mechanism designed to combat the smuggling of "blood diamonds" -- the gems sold to fund military conflicts around the world.

And as if diamonds, guns, drugs and tainted money weren't enough, human traffickers have made their way to Venezuela as well. The country has become a haven for human traffickers because its laws offer so little protection to their victims, especially women. It is also a major stopover for illegal immigrants from China, the Middle East and other parts of Latin America who are on their way elsewhere. They can obtain a Venezuelan passport in a matter of hours.

The great paradox of this terrible story is that, despite Chavez's constant denunciations of globalization, he hasn't protected Venezuela from its worst consequences. His nation has been globalized -- by criminal gangs. And they import and export corruption, crime and death. And that may be more critical in shaping Venezuela's future than any of Chavez's political experiments.

Moises Naim is the editor of Foreign Policy magazine and the author of "Illicit: How Smugglers, Traffickers and Copycats Are Hijacking the Global Economy."

Reuters reports independent poll that has the referendum down by 49% 'traitors to 39% Chavez enablers: http://www.reuters.com/article/worldNews/idUSN2333983120071124?feedType=RSS&feedName=worldNews&rpc=22&sp=trueLinks courtesy of Drudge Report. I really haven't seen this covered yet in the mainstream media. Chavez attempting to become a permanent leader with dictator powers and cheating in elections is hardly news in their opinion.--I predict the ten point no-vote lead is not good enough. In a previous referendum independent reports had Chavez losing by 60-40% in the exit polls but the official Chavez voting machines tallied it up as a Chavez win at 60-40%, so exit polls were off by down 20 to up 20 - a 40% swing. "International observer" Jimmy Carter instantly verified the results and then-Secretary of State Colin Powell quickly gave it the U.S. stamp of approval. Oh well.

In 1981, Argentine inflation topped 130%, and by the early months of 1982 the situation was rapidly deteriorating. A web of price controls designed to compensate for monetary mischief at the central bank only made things worse. Confidence had collapsed and civil unrest was growing.

The military government's decision to lay claim to Britain's South Georgia Island on March 19, 1982, and later the Falklands, was dictator Leopoldo Galtieri's last-ditch effort to boost the nation's sense of strength, and to distract it from the reality that it was caught in an economic maelstrom.

Fast forward to 2008 and Venezuela, where the parallels cannot be ignored. The military government of President Hugo Chávez is engaging in provocations against a foreign power that would seem to have little purpose other than getting news of the crumbling economy off the front pages and ginning up nationalism.

In a speech before the national assembly last month, Mr. Chávez dropped a bombshell, proclaiming that Venezuela now recognizes the Colombian rebel group known as the FARC as a legitimate political actor. He went on to ask that European and South American governments remove the group from their terrorist lists. A day earlier his special envoy for FARC relations went public with his own fondness for the Colombian rebels, and with the news that the Venezuelan government stands ready to help them.

This was more than Mr. Chávez playing footsie with the FARC, which he has long been doing. This was a statement of official support for a band of outlaws who seek the destruction of the Colombian democracy. The news shook both nations. It suggested that Colombia is not only at war with the rebels, but also with a neighboring state.

Mr. Chávez probably doesn't really want war with the militarily superior Colombia anymore than Galtieri wanted to battle it out with Britain. But by poking his neighbor in the eye, he was undoubtedly hoping for some kind of a reaction, to which Venezuela naturally would be obliged to respond. Amid an escalation of tensions between the two countries, a nationalist outcry to defend Venezuelan honor might dwarf the many troubles at home.

Colombia's president didn't take the bait. Instead of getting in a spitting match with Venezuela, Álavaro Uribe went to Europe shortly after Mr. Chávez's FARC speech to shore up support for his anti-terrorist agenda. He came home with backing from E.U. foreign policy chief Javier Solana, French President Nicolas Sarkozy, and even Spanish Prime Minister Jose Luis Zapatero, who is notorious for his admiration of Latin American leftists. Mr. Chávez thus suffered yet another humiliation, only six weeks after he lost his bid to rewrite the country's constitution.

Hubris aside, Mr. Chávez had to know that his defense of the FARC was a long shot. But desperate times call for desperate measures. As the deterioration of the Venezuelan economy accelerates, Mr. Chávez is fast becoming a desperado with no better idea of how to get out of his jam than did Galtieri.

Central to his troubling circumstances is inflation. With Venezuelan crude oil around $80 per barrel, the local currency known as the bolivar ought to be strong. But the central bank has lost its independence and now acts as an arm of the Chávez government. As such it has shown little interest in defending the value of the currency.

Instead, it uses the gusher of oil dollars coming into the country as a reason to print up new bolivars to be put into circulation through government spending. This has pushed up demand and sent prices skyrocketing.

Just what Venezuelan inflation is now is anybody's guess. The government figure for 2007 is 22.5% but that number is derived from a basket of goods that includes price-controlled items, which are difficult to actually buy. In real life, when Venezuelans go shopping they have to pay market prices if they want to come home with the goods. This means that the cost of living is higher than the official rate.

Price controls haven't held down inflation but they have produced shortages of the goods they cover. Milk, rice, cooking oil, chicken, beef, pork, sugar, black beans and eggs are all hard to find and Venezuelans say that grocery shopping now requires stops at five or six stores. The most reliable sources of price-controlled items are street vendors, who charge two and three times the legal limit but tend to have stock.

Even Mr. Chávez recognizes that the shortages are real and not about to go away. And despite what appears to be a primitive understanding of economics, he may even have figured out the connection between prices and supply. This would explain why, as dire milk shortages became undeniable in recent months, he finally decreed an increase in the regulated price.

But don't hold your breath for further signs of enlightenment. Control of the oil industry has been the main reason Mr. Chávez has been able to squelch democracy. His own warped logic suggests that he needs to control other key sectors if he wants to keep his grip on power. If he can strangle the private sector, he can starve his adversaries.

This is why he is promoting government-owned food processors and has put a full-court press on private-sector agribusiness. Price controls now apply not only to the retail market but also to business transactions. This is designed to stop, for example, dairy farms from diverting raw milk to the production of cheese and yogurt, which have no price controls. Anyone caught violating price controls or selling products across the border in Colombia risks expropriation.

All of this is being policed by the army. With its monopoly on the use of force, the government can indeed destroy the private sector. But as Galtieri found out, it cannot decree that supply meets demand. As shortages become more acute, don't be surprised to see the Venezuelan desperado picking more fights.

Exxon to freeze $12B in Venezuelan assetsHigh Court of England grants U.S. oil company the right to freeze assets belonging to the country's recently nationalized oil company.

NEW YORK (Dow Jones/AP) -- ExxonMobil Corp. has secured court orders to freeze more than $12 billion in worldwide assets of Venezuela's state-owned oil company, as it prepares to dispute the nationalization of a multibillion-dollar oil project.

The move limits Petroleos de Venezuela's room to maneuver as it fends off challenges from major Western oil companies over President Hugo Chavez's 2007 decision to nationalize four heavy oil projects in the Orinoco Basin, one of the richest oil deposits in the world.

Exxon (XOM, Fortune 500) and ConocoPhillips (COP, Fortune 500) opted to walk away from the contracts rather than stay on in a minority role. Both have filed arbitration proceedings with the World Bank seeking compensation and Conoco "continues to discuss an amicable resolution specific to the assets that were expropriated in Venezuela," Conoco spokesman Bill Tanner said.

ExxonMobil has so far been the most aggressive in fighting back. The Irving, Texas-based oil major's legal action essentially seeks to ring-fence Venezuelan assets ahead of any decision by the arbitration panel.

According to documents filed last month in the U.S. District Court in Manhattan, Exxon Mobil has secured an "order of attachment" on about $300 million in cash held by PdVSA. A hearing to confirm the order is scheduled in New York for Feb. 13. Exxon also filed documents with the New York court showing it had secured a freeze on $12 billion on PdVSA's worldwide assets from a U.K. court.

"On Jan. 24, the High Court of England and Wales was satisfied that there is a real risk that PdVSA will dissipate its assets and accordingly entered a Worldwide Freezing Order ex parte," Exxon said in the filing to the New York court. The order prohibits PdVSA from "disposing of its assets worldwide up to a value of $12 billion whether directly or indirectly held."

Further hearings on the $12 billion freeze are scheduled on Feb. 22, according to Exxon's filing.

In a statement, Exxon Mobil spokesperson Margaret Ross confirmed the court filings. She added that the company "has obtained attachment orders from courts in the Netherlands and Netherlands Antilles against PdVSA assets in each of these jurisdictions up to $12 billion." Exxon said the orders are subject to further review by the courts. "We will not comment further on legal proceedings," she said.

In a filing, PdVSA disputed the need for a freeze. In a Jan. 24 response disputing orders of attachment from Dec. 27 and Jan. 8, PdVSA said Exxon Mobil "has failed to sustain its burden of establishing that any arbitration award it obtains may be rendered ineffectual without provisional relief." A PdVSA spokesman declined to comment.

Exxon's move signals an aggressive response to the trend of resource- rich countries flexing their muscle over the large oil majors. Since oil prices began skyrocketing earlier in the decade, oil-producing nations have grown bolder in their dealings with publicly traded companies active on their territories by demanding larger stakes in existing projects and raising taxes.

Venezuela will pay two European oil companies that were partners in other Orinoco heavy oil projects less than half the estimated market value of their stakes, according to a copy of the compensation agreement reviewed by Dow Jones Newswires.

That agreement offers an inkling of what ExxonMobil and ConocoPhillips could be expecting as they carry on compensation talks with PdVSA.

ORLANDO SIERRA/AFP/Getty ImagesVenezuelan President Hugo ChavezSummaryAfter Colombia’s cross-border raid into Ecuador on March 1 that resulted in the death of the Revolutionary Armed Forces of Colombia’s second-in-command, Venezuelan President Hugo Chavez warned March 2 that if Colombia launched any such action on Venezuelan soil, it would be cause for war. Chavez then closed the Venezuelan Embassy in Bogota and ordered 10 battalions to the Venezuelan-Colombian border. The Venezuelan military is no match for Colombia’s larger, better-funded and more experienced forces.

AnalysisFollowing a March 1 Colombian cross-border raid into Ecuador that resulted in the death of the No. 2 Revolutionary Armed Forces of Colombia (FARC) commander, Venezuelan President Hugo Chavez on March 2 warned Bogota against launching any similar operation on Venezuelan soil. The same day, during his weekly radio address, Chavez announced that he would be closing the Venezuelan embassy in Bogota. He added that he had asked his defense minister to send 10 battalions — including tank battalions and military aviation — to the Venezuelan-Colombian border.

Venezuela’s armored formations (with tanks that include a smattering of old French AMX and British Scorpion designs) are based on the outskirts of Caracas, but an infantry brigade is based at San Cristobal near an important border crossing, and another at Maracaibo. Some tanks appear to be regularly stationed on the border. Unless this move has been premeditated, it would likely take several days — at the very least — to get an armored unit stationed outside Caracas spun up and on the road toward the border.

This road is the one most capable of sustaining heavy logistical trains from the capital. In fact, except for the northernmost 300 miles, the border is covered by dense rainforest and does not appear to have particularly heavy transportation infrastructure. The roads from Caracas to San Cristobal and Maracaibo appear to be the path of least resistance and thus, logistically speaking, are the paths a military mobilization is likely to take.

Much of this northern sector of the border runs along a mountain ridgeline, so while there is decent road infrastructure to get there, it would literally be an uphill battle for Venezuelan forces to move across the border there, as they would be ceding the high ground to Colombia.

Further north along the coast, a major road crosses flat coastal lowlands above Maracaibo, which offers Venezuelan troops the option of attempting to cut off the majority of the low-lying La Guajira peninsula — though there does not appear to be much of value there. Beyond the La Guajira Department lies the Magdalena Department, which contains Colombia’s highest peak, the 18,000-foot Pico Cristobal Colon.

Meanwhile, there is the very serious issue that the Venezuelan military is unpracticed at the fine art of logistics and is not known for its acumen for maintaining vehicles in depot, much less those that are deployed. Stratfor is skeptical of Venezuela’s ability to project and sustain forces meaningfully beyond its borders, especially regularly organized units and the tank battalions Chavez has requested.

Colombia’s military is larger, better funded and more operationally experienced — each by a factor of 10 — than Venezuela’s. U.S. funding and the prosecution of the counternarcotics war have given Colombia one of the most noteworthy military machines in the region. In addition, Bogota’s military is well-disposed on its side of the border to counter any offensive move by Caracas. Though Venezuelan forces moving quickly might be able to achieve some short-lived localized superiority, there is little to suggest that they would be capable of consolidating that gain before Colombia’s military came down upon them.

Thus, the metrics of a Chavez on the warpath are not thus far holding up to scrutiny. But Stratfor continues to monitor the situation closely. The Venezuelan president has been losing ground domestically of late and no doubt could benefit from stirring up some nationalist sentiment.

Meanwhile, Stratfor will be watching the movement of Venezuelan troops to see whether 10 battalions are moved to reinforce the ones already on the border and, if so, how quickly. Should these reinforcements — especially armored battalions from Caracas — arrive in short order, it would suggest that Chavez’s announcement was premeditated, rather than an off-the-cuff reaction to the March 1 FARC raid.

And there is always the outlying concern that Chavez’s cultivation of relations with FARC was not because he wanted leverage over the organization for solely political purposes, but because he might attempt to use them as a militant proxy.

Chávez's 'War' DrumsMarch 4, 2008; Page A16Colombia's military scored a major antiterror victory this weekend by killing the second in command of the Revolutionary Armed Forces of Colombia and 16 other FARC guerrillas. Venezuelan President and FARC ally Hugo Chávez has reacted by threatening war against Bogotá. But the real news is that the raid produced a laptop computer belonging to the expired comandante that reveals some of Mr. Chávez's secrets.

The raid that killed FARC big Raúl Reyes shocked the terrorists because it happened in Ecuador -- about a mile across the border from Colombia. The guerrillas are used to operating inside Colombia, only to escape to safe havens in Ecuador and Venezuela when Colombia's military is in hot pursuit. This time Colombian officers kept going, and for legitimate reasons of self-defense. (We doubt the U.S. would stop its troops at the border if terrorists were bombing sites in Texas from havens in Mexico.)

AP Mr. Chávez rushed to insist that Ecuador's sovereignty had been violated, even before Ecuador did. On his weekly television show on Sunday, the Venezuelan bully called the death of Reyes a "cowardly assassination" and observed a moment of silence. He closed the Venezuelan embassy in Bogotá, ordered 10 battalions with tanks to the Colombian border, and warned of war if the Colombian army staged a similar raid inside Venezuela.

Such a conventional war isn't likely. Colombia today has a superior military force, thanks in part to Mr. Chávez's purge of his own officer corp as a way to minimize risks of a coup d'etat against him. The war bluster is especially phony because Mr. Chavez is already waging his own guerrilla campaign against Colombia through his support for the FARC. The FARC's "foreign minister," Rodrigo Granda, was nabbed three years ago by bounty hunters in Caracas, where he was living comfortably, and a former Venezuelan military officer told us years ago that the army was instructed not to pursue the FARC in the Venezuelan jungle.

What may really have upset Mr. Chávez is the capture of Reyes's laptop. According to Colombia's top police official, General Oscar Naranjo, the computer contains evidence supporting the claim that the FARC is working with Mr. Chávez. General Naranjo said Monday that Reyes's laptop records showed that Venezuela may have paid $300 million to the FARC in exchange for its recent release of six civilian hostages. Mr. Chávez had spun those releases as a triumph of his personal mediation.

General Naranjo said the laptop also contains documents showing that the FARC was seeking to buy 50 kilos of uranium, and the Colombian newspaper El Tiempo has reported that the records revealed the sale of 700 kilograms of cocaine valued at $1.5 million. The general added that the military found a thank-you note from Mr. Chávez to the FARC for some $150,000 that the rebels had sent him when he was in prison for his attempted coup d'etat in 1992.

Ecuador, an ally of Mr. Chávez, was slow to express outrage at the Colombian raid but eventually came around. Ecuadorian President Rafael Correa said that the rebels were "bombed and massacred as they slept, using precision technology." He is right about that -- which is why the FARC's friends are so angry.

Venezuela is moving what its military commander calls 10 tactical battalions to the Colombian border, especially toward the Venezuelan states of Zulia, Tachira and Apure, El Universal reported March 5, citing Gen. Jesus Gregorio Gonzalez Gonzalez, chief of the armed forces’ strategic command. The battalions comprise equipment and personnel from the navy, air force and national guard. Gonzalez said about 90 percent of the units President Hugo Chavez requested March 3 had already been mobilized.

At the tender age of 23 years, Yon Goicoechea is arguably President Hugo Chávez's worst nightmare.

Mr. Goicoechea is the retiring secretary general of the university students' movement in Venezuela. Under his leadership, hundreds of thousands of young people have come together to confront the strongman's unchecked power. It is the first time in a decade of Chávez rule that a countervailing force, legitimate in the eyes of society, has successfully managed to challenge the president's authority.

The students' first master stroke came in the spring of last year, when they launched protests against the government's decision to strip a television station of its license. The license was not restored but the group was energized. In June it began six months of demonstrations -- one with as many as 200,000 people -- to build opposition to a referendum on a constitutional rewrite that would have given Mr. Chávez dictatorial powers. When Mr. Chávez was defeated in the referendum, many observers attributed it to those marches and to student oversight at the polls, which reduced voter fraud.

Yet in an interview with me in Washington last week, the baby-faced Mr. Goicoechea, slumped on a sofa in blue jeans and a rumpled shirt, insisted that the shifting political winds have little to do with him. "We have generated a consciousness in the youth that doesn't depend on me. I could be dead or living in another county and it would go on. We have already won the future."

The revelation two weeks ago, that Mr. Chávez is working with the Colombian terrorists known as the FARC, sent chills up the spines of democrats throughout the hemisphere. Yet Mr. Chávez is likely to remain in power until Venezuelans themselves decide he should go. That is probably not going to happen until the electorate is offered something other than going back to the corrupt rule that existed before Mr. Chávez came to power. This is why Mr. Goicoechea, despite the self-effacing manner, attracts so much attention from his compatriots.

Mr. Chávez won the presidency in 1998 largely because Venezuelans were fed up with the ruling political and economic elite. Over 40 years of so-called democracy, the traditional parties had manipulated the law to grant themselves privilege and loot state coffers. When voters gambled on Mr. Chávez, it seems to have been more about rejecting the status quo than embracing the fiery newcomer.

No one understands this reality better than Mr. Goicoechea. He agrees that the country needs a new direction. "The chavistas are not wrong when they complain about exclusion," he told me. "To deny that these problems exist is to deny that there is a President Chávez, and to deny that he is a product of what came before him."

This may seem obvious, but until now it has not been the language of most of the Venezuelan opposition. Instead, the political debate largely has been a screaming match about power. Mr. Goicoechea takes a different stance, stressing reconciliation. He speaks about understanding the grievances of the disenfranchised, and looking for common ground that can give rise to solutions. The student leader says that two ideals hold his movement together: liberty and democracy, both of which he says have been absent in Venezuela for a long time. "Populism is not democracy."

I ask him if he wants to restore the country's institutions. "No, we want to build institutions. To say that we are restoring institutions would be to say that we had democracy before President Chávez, and I don't think so. We may have had an independent Supreme Court, but the poor had no access."

Mr. Goicoechea sees the current state of affairs as a continuation of the past, with different players. "Mr. Chávez says that his government serves the lower-income classes, but the reality is that the system still only serves those in the middle and high-income classes." That resonates with people.

Ensuring access to legal institutions, so that all Venezuelans are guaranteed the protections of the state, is for Mr. Goicoechea the path to "social justice." As an example he cites Petare, a notoriously poor Caracas barrio. "Private property rights protection does not exist there," he says. "No one owns their own land, even though the laws say that you earn that right if you live there for a certain number of years. We will have a true revolution in Venezuela when we have strong, liberal institutions that defend the rights of the people."

It is perhaps a sign of Mr. Goicoechea's effectiveness that he has received "all kinds of threats" against himself and his family. Last year he and a group of students were the targets of a small explosion set off at a public forum. At the same event, an attendee who disagreed with his ideas snuck up behind him and, when he turned around, punched him in the nose. "It's not important that they broke my nose," he says, but that the incident highlights the problem of intolerance. He says that his high profile mostly protects him, but ordinary people don't enjoy such protection. For them, violence and intimidation mean they cannot express themselves.

This is why the student movement is so important. It doesn't pretend to provide a political alternative, but its critical mass and organization now give voice to many who had come to fear expressing dissent under chavismo. This is a crucial step toward what many young Venezuelans hope will some day be a free society.

So what's next on the students' agenda? One issue they will raise this year is the government's ruling that disqualifies some 400 Venezuelans -- adversaries of chavismo -- from running for office in the November elections. This, Mr. Goicoechea points out, is a violation of the political rights of all Venezuelans. He insists that the students are not trying to defeat the president, and that they respect his office. "But the president of Venezuela is not more than me. He must respect that we are citizens too."

Venezuela: The United States Turns the ScrewsStratfor Today » June 19, 2008 | 2236 GMT

EVARISTO SA/AFP/Getty ImagesVenezuelan President Hugo Chavez SummaryThe U.S. Treasury Department on June 17 accused a Venezuelan diplomat and head of the Caracas-based Shia Islamic Center of giving Hezbollah financial support. The United States, which is targeting other Venezuelan nationals suspected of involvement with Hezbollah, is working to increase the pressure on Venezuelan President Hugo Chavez, who is already weakening under the weight of domestic problems.

AnalysisThe U.S. Treasury Department on June 17 accused Ghazi Nasr al-Din, a Venezuelan diplomat and president of a Caracas-based Shia Islamic center, of giving financial assistance to Hezbollah. The United States has also targeted Fawzi Kanan and two Venezuelan-based travel agencies that he allegedly owns or controls. Although the United States has made accusations of involvement with Hezbollah before, in taking the step to target Venezuelan nationals, the United States is ramping up pressure on already-weakened Venezuelan President Hugo Chavez.

The most recent set of accusations against Chavez’s government were released by U.S.-based Venezuelan reporter Patricia Poleo in a report that gave detailed accounts of Hezbollah, al Qaeda and other Arab movements in Venezuela. The report alleged that Venezuela is hosting at least five camps in various parts of the country where Venezuelan and Lebanese Hezbollah members learn to use munitions, and that those members plan to use Venezuela as a launching point for attacks on the United States. The report is suspiciously detailed in its descriptions of alleged terrorist training activities in Venezuela’s jungles. The information would have been very hard to come by without the aid of a sophisticated intelligence agency.

Washington has long been concerned about security threats originating in Venezuela. A well-known transit point for illegal drugs and arms, Venezuela also poses a serious risk to U.S. security because of its lax visa regulations and rampant corruption. Furthermore, Venezuela has been the most significant port of entry for illegal immigrants from the Eastern Hemisphere since before Chavez took control of the country.

Although Stratfor has no direct evidence that Hezbollah is operating in Venezuela, it would not be much of a surprise. In fact, Venezuela’s close relationship with Iran makes it almost inevitable. Most of Venezuela’s “joint” programs with Iran — such as a recently announced joint bank — make little sense because, depending on the project, Venezuela and Iran lack the cash, technology and/or organic market to launch them. Both countries are exporters of oil, with very little other economic strength, so trading between the two is largely superfluous. But helping Iran by supporting Hezbollah only requires some land in the jungle and lax security with passports — two things Venezuela has in spades.

What Venezuela would get out of such a partnership is not entirely clear. A core part of Chavez’s domestic security strategy has been to develop local militias that he can call on to support him in case the Venezuelan military turns against him. But harboring terrorist training camps in one’s backyard is like painting a big bullseye on one’s country and inviting the U.S. Air Force to take their best shot. But it is possible Iran is worth the risk, whether it is able to offer money or political favors in return.

Whether or not it is true that Venezuela is helping Hezbollah, the possibility for such cooperation has existed for several years. But the timing of this asset seizure poses some interesting possibilities, as it coincides with some dramatic shifts in Chavez’s behavior. These shifts include an apparent decision to deny public support to the Revolutionary Armed Forces of Colombia (FARC) and a move to revise a key intelligence law that would have strengthened his authoritarian control over Venezuela.

Chavez’s support of the FARC has been unpopular in Venezuela; in an April poll by Venezuelan polling firm Datanalisis, more than 70 percent of Venezuelans expressed disapproval of the FARC. This fact no doubt played a large part in his decision to reverse support for the group. With support for a second terrorist organization coming to light, Chavez’s credibility will only suffer more.

At the same time, Chavez is experiencing serious challenges on other fronts.

Inflation in Venezuela is skyrocketing, in part because of monetary inflation partially driven by massive government spending. Coupled with rising global food prices, the inflation has made life measurably harder for Venezuelans (especially poor Venezuelans), and dissatisfaction with Chavez’s policies is increasing.

Furthermore, Chavez’s social programs that service his support base rely on funding from Venezuelan state-owned energy company Petroleos de Venezuela (PDVSA) — and things are not looking so good for PDVSA. Burdened with the financial responsibilities of the entire state, the company is at risk of not being able to maintain its oil production, much less increase it to meet rising fiscal needs. And all this is with oil at $130 per barrel; any price drop and Chavez immediately will have to choose who not to give subsidies to.

Demands on PDVSA will not slacken soon, either. With local elections approaching, Chavez is under pressure to bring his party — the United Socialist Party of Venezuela — under his control. Designed to unite all leftist parties in Venezuela under one banner, the party is not as united as Chavez would like it to be. The upcoming November elections have exposed deep disagreements among party members and have provoked Chavez to go so far as to kick prominent figures out of the party. The elections will test his ability to hold the country together, and Chavez will need all the help he can get from his costly social programs to secure public support.

The bottom line is that Chavez is vulnerable like never before. With food prices soaring, local elections approaching and criticism of his policies mounting, the implication that Chavez’s government is aiding a second terrorist organization is well-timed to take advantage of his already-declining popularity.

The kind of moves the United States is making to undermine Chavez’s popular support are well in line with Stratfor’s projection that outside forces — including the United States — are supporting the unity of the Venezuelan opposition. What remains to be seen is where exactly the break point is for Chavez’s supporters, and whether or not the military will support Chavez in the face of a concerted attempt by the opposition to throw a revolution.

Political DiaryJune 26, 2008Chávez Meets His Match It's not been a good month for Venezuelan dictator Hugo Chávez. He had to do an about-face and call on the Marxist guerrilla group FARC to stop trying to overthrow the government of neighboring Colombia, lay down its arms and release its 700 hostages. But that head fake came only after evidence surfaced that Mr. Chávez had actually offered FARC leaders $300 million to support their terrorist operations and had even given them their own nameplate on an office in Venezuela's Pentagon.

Now Mr. Chávez has trouble on the domestic front. Marisabel Rodríguez, the former first lady of Venezuela whom Mr. Chávez divorced in 2004, announced she will run for mayor of one of Venezuela's most important cities in November local elections. She will run as an opposition candidate because she wants to "change the face and way of doing politics in this city and this country," she told reporters.

The candidacy of Ms. Rodríguez, a public relations executive, will no doubt revive stories about the couple's messy divorce. She is apparently a past master at psychological warfare against her ex-husband. "Marisabel doesn't hesitate to talk about Chávez on TV while holding their daughter, and that is the kind of tactic the opposition likes because to fight a media figure like Chávez you need to shock people in some way," says Arturo Serrano, a political scientist, told Britain's Guardian newspaper.

ALEX GUZMAN/AFP/Getty ImagesRussian Su-30MK “Flankers” conduct a demonstration in Venezuela in 2006SummaryRussia has completed delivery of two dozen Russian-built Sukhoi “Flanker” fighter jets to Venezuela, Venezuelan President Hugo Chavez said Aug. 3. One of the earliest and most prominent deliveries in connection with a series of Russian arms deals that now amount to some $4.4 billion since 2003, these planes could affect the regional military dynamic.

AnalysisVenezuelan President Hugo Chavez announced the completion of delivery of two dozen Sukhoi “Flanker” fighter jets Aug. 3. Though not the newest Sukhoi model, the Su-30MK series jets are widely considered to be among the most advanced fighter aircraft currently available on the world market. Part and parcel of the arms deals between Caracas and Moscow since 2003 that now amount to some $4.4 billion, the aircraft could affect the regional military dynamic.

Chavez’s focus on arms purchases stems partly from a desire to play to nationalist fervor and in part from real fear. He has concertedly attempted to paint Washington as an interminable foreign enemy to focus domestic attention abroad and garner support for his rule. And although an actual invasion of Venezuela by the United States is not in the cards, the two states have had a hostile relationship since Chavez came to power in 1999. It is no secret that U.S. funds were used to help finance a 2002 coup attempt — something Chavez in particular has not forgotten. (And it is worth noting that in the wake of this coup, Chavez purged the military of most of its competent officers.)

From a military perspective, the Venezuelan air force has suffered since 2001 when the breach with Washington resulted in an end of the delivery of parts and supplies for the Venezuelan air force’s U.S.-built F-16s — the country’s premier fighter aircraft. Maintenance crews have reportedly been able to keep a few air-worthy (a point of institutional pride), but most remain on the ground. Despite this, Venezuela’s best pilots reportedly get a respectable amount of airtime annually, though the degree of their proficiency remains unclear.

Related LinkVenezuela: Chavez’s Move For More Control The transition from Venezuela’s long-standing use of Western military equipment to Russian hardware will inherently present difficulties and perhaps entail significant delays. U.S. and Russian equipment is built to different standards of quality with largely independent design heritages. Electronic systems especially will take a great deal of effort to learn and integrate. Indeed, even after the transition to the new hardware, the air force will then have to learn how to best exploit the aircraft’s newfound capabilities and integrate that utility into its operational doctrine. And while both Russian pilots and maintenance reportedly are in Venezuela training their counterparts, Moscow’s reputation for after-market service and sustainment is notoriously poor. The ultimate quality and durability of Russian training and support in the Venezuelan case is yet to be seen — but remains in doubt.

But in the mean time, some of the first airframes to arrive (delivery began in December 2006) are already considered in service with the air force, and reportedly even launched ordnance in June. Caracas’ pilots (how many are Russian or former Soviet republic expatriates is unclear at this time) have a good chance of being able to operate at least a few of the new Sukhoi aircraft in basic mission profiles in the near future. If Venezuelan pilots prove capable — and that is no small if — Chavez’s investment in Russian hardware could begin to represent a meaningful military capability.

(click image to enlarge)These planes have a combat radius in excess of 500 nautical miles — more than either the Venezuelan F-16s or their older French-built Mirage III brethren. This is enough to reach the Panama Canal, the U.S. Naval Station at Guantanamo Bay and the U.S. territory of Puerto Rico as well as all of Colombia — Caracas’ main regional rival. Though it is unclear exactly which ordnance was part of the deal, a broad-spectrum kit would include everything from air-to-air missiles to ground attack munitions and potentially even air-launched anti-ship missiles. The Su-30MK series is highly maneuverable and capable of simultaneously engaging two airborne targets.

Competently operated, the Su-30MKV’s — the Venezuelan Su-30MK variant — would be, hands-down, the most capable multirole fighter jets in Latin America and the first instance of “Flanker” proliferation in the Western Hemisphere (it has been rampant in East Asia). Though they would not stop a concerted assault by the United States, the jets are something Venezuela’s neighbors — especially Colombia — will have to work to establish a new counter against.

Socialism: Venezuela's seizure of Cemex assets Monday is more than a typical nationalization of resources. Its vindictive manner has much to do with the firm's Mexican headquarters. It's a message to others in the region.

Like a quasi-military conquest, Venezuelan strongman Hugo Chavez marched in troops to "take back" four Cemex cement plants in the dead of night as part of his nationalization of cement announced in April. "It was time," he said Tuesday, calling it one of his "steps toward socialism."

Chavez then popped out fireworks as red T-shirted mobs, judges and politicians headed to the plants and cheered their "victory."

Why was Cemex "defeated"? Because last April, Mexico's Cemex told Chavez its plants were worth $1.3 billion, based on standard norms of value. Chavistas said no dice, and after driving their stock price down in Caracas trade, offered $800 million tops.

The Venezuelans, of course, had the last word, and moved into their clownish conquest even before Chavez's 90-day negotiation period expired.

For Latin Americans, this is something of a wake-up call. No longer will Latin American companies be exempt from Chavez's power plays. In fact, a Latin American company might now expect even worse treatment than the western ones Chavez has grabbed.

Mexican President Felipe Calderon, no stranger to public quarrels with Chavez over free markets, complained that Chavez's takeover amounted to discrimination against the Mexican company. He noted that Venezuela had paid two other cement firms — Holcie of Switzerland and Lafarge of France — fair prices for their assets. So the Mexican company was ripped off, which "we cannot understand," Calderon said, calling for more talks.

The sooner Mexico recognizes the obvious, the better.

Chavez's vindictive treatment of a Mexican company has more to do with his loathing of Mexico, and the capitalist development path it has pursued, than it does with price. Successful Latin American companies ought to expect particularly harsh treatment from Chavez if they succeed. There already are many signs of this.

For one, the last time Chavez made a show of troops and flags was when he seized Exxon Mobil's assets in 2007. Like Exxon, Cemex is a foreign company, and the amounts expropriated — about $1 billion in Exxon's case and $1.3 billion in Cemex's — are comparable.

Second, like Exxon, Cemex is a big company that has resisted being kicked around by a petty dictator. Cemex reportedly has told Chavez that it would see him in international court.As global companies, both Exxon and Cemex know their responses to Chavez are being watched closely by other dictators. They must defend their shareholders, an alien notion to Chavez.Still, it goes even beyond that. Mexico's Cemex, like U.S.-based Exxon, is known for its advanced technology, state of the art operations, fiscal transparency and high profitability. For any company this is remarkable. But for a Mexican company it is especially so.

Chavez not only cannot stand Mexico, he also cannot stand the idea of a successful, world-class Latin American company like Cemex providing an example to the region. Rather than leave them alone, he's not only trying to rub their presence out with nationalization, he's also tricked up bogus charges of tax evasion and environmental damage — something no nationalized firm has avoided.

Chavez has nationalized telecommunications, electricity, farms, iron, steel, oil and banks over two years in a bid to end private property and turn Venezuela into Cuba. All of the nationalized firms have since gone from profitability to losses.

The prosperity and better life Cemex's jobs represent for its 67,000 workers as well as the superior product it delivers to its customers directly challenges Chavez's claim to ideological dominance in the region.

As we said, Cemex likely will defend itself in court. But Mexico's government will have to toughen up and prepare to confront a predator challenging the success of its private sector on more than just this front. Chavez's wrath against Mexico is particularly strong.

SummaryThe Venezuelan daily newspaper El Universal is reporting that a tape played on a Venezuelan state television show allegedly depicts the voice of a former Venezuelan admiral plotting to overthrow President Hugo Chavez. It is possible the allegations are true — the military has reasons to be worried about Chavez. In any case, the president will try to use the alleged plot to his benefit.

AnalysisA possible plot to oust Venezuelan President Hugo Chavez has been uncovered, El Universal reported Sept. 11. The alleged coup was revealed in a voice recording said to be that of former Venezuelan Vice Adm. Carlos Millán and played by Chavez ally Mario Silva on his television show the evening of Sept. 10. Whether or not the accusations are true, they serve to create a sense of embattlement for the Chavez government and will be used as a rallying cry for Venezuelan nationalism.

Citing an unnamed source, Silva played the tape on which a man’s voice said: “Here there is only one objective: We will take the Miraflores Palace…. The objective can only be one thing, that is to say, all of the forces must be where [Chavez] is. If he is in Miraflores, that is where all the forces will be.” In addition to Millán, Chavez has named former army Gen. Wilfredo Barroso Herrera and former air force Gen. Eduardo Báez Torrealba as co-conspirators. In response, Chavez supporters have issued a call to march Sept. 15 in protest of the conspiracy, and Chavez has announced that unnamed individuals have been detained. In addition, Foreign Minister Nicolas Maduro accused the United States of sponsoring the plan.

The accusation adds to the list of former military officials whom Chavez has accused of various misdeeds or who have spoken out against the president. One of the most prominent of the officials is former Venezuelan Defense Minister Gen. Raul Isaias Baduel, who is embroiled in a legal battle with the Venezuelan government, and recently survived a half-baked assassination attempt.

It is quite possible that the coup allegations are true. It would not be the first time the military has been involved in undermining Chavez — indeed, portions of the military became involved in a 2002 coup attempt that briefly removed Chavez from power.

At this point, given the deteriorating security situation in the country, skyrocketing inflation and the slow downward spiral of Venezuela’s state-owned oil company Petroleos de Venezuela, the military has a great number of reasons to be concerned about Chavez’s rule. Indeed, Baduel and other military leaders have been especially opposed to Chavez’s policies that have attempted to alter or challenge the structure of the military. This includes a controversial plan to create pro-Chavez civilian militias as a new branch of the military.

Regardless of whether the coup allegations are true, they serve an important purpose for Chavez by increasing the public’s sense that the government is embattled. With municipal and state-level elections approaching in November, Chavez has been fighting a domestic battle for support as he attempts to undermine the opposition and strengthen his United Socialist Party of Venezuela (PSUV). Chavez, like former Cuban President Fidel Castro before him, holds power through constant brinksmanship behavior. (An excellent example of this phenomenon are the recent tensions with Colombia; Venezuela moved troops to the border and threatened war — despite the relative weakness of his military and Colombia’s refusal to engage.)

In fostering a sense of impending doom from the outside — be it from the United States or scheming oligarchs — Chavez (usually successfully) attempts to rile up nationalistic support for his sagging regime.

Hugo Chávez's threat last week to bring tanks to the streets if his side does not win key states in Sunday's gubernatorial elections is chilling. But it is not surprising. It is only the next logical step in what is the Venezuelan president's drive to seize all power and silence all dissent.

Venezuelan strongman Hugo Chávez.Despite numerous setbacks for Venezuelan democracy, many still believe that they can rid themselves of Mr. Chávez democratically. Their expectations were raised last year when voters defeated a referendum in which Mr. Chávez attempted to rewrite the constitution to strengthen his authoritarian powers. Now they hope to deliver another setback by voting in anti-Chávez governors in at least three and maybe more than 10 of the country's 23 states. The top post in the capital district of Caracas is also up for grabs.

There are currently at least 18 states with pro-Chávez governors, and despite deteriorating living standards, Mr. Chávez's United Socialist Party of Venezuela is expected to be returned to power in a good number of them.

Mary Anastasia O'Grady speaks with James Freeman. (Nov. 17)One reason is that the cards are stacked against the opposition. The government is using state funds for pro-Chávez candidates and has dramatically outspent the competition. The National Electoral Council is dominated by pro-Chávez representatives. Scores of individuals who are popular were declared "ineligible" to run. The government has refused to release the voter rolls so that the opposition can ensure that they are clean. On election day, lines are expected to be long and the widespread assumption that the government will use tricks to win could dampen opposition turnout.

Yet even these odds are not enough for Mr. Chávez. In recent weeks he has begun threatening to use the military against his own population in states where his municipal and gubernatorial candidates are defeated. On a trip to the state of Carabobo last week, for example, he told voters, "If you let the oligarchy return to government then maybe I'll end up sending the tanks of the armored brigade out to defend the revolutionary government." Just as troubling are the president's declarations that in states where his candidates are not elected, he will withhold federal funding.

The Americas in the NewsGet the latest information in Spanish from The Wall Street Journal's Americas page.Venezuelans saw this coming. From his earliest days as president in 1999, Mr. Chávez began working to destroy any checks on his power. On April 11, 2002, after weeks of street protests against this effort, hundreds of thousands of Venezuelans marched again in Caracas. Nineteen people were shot dead in the streets by government supporters. When Mr. Chávez asked the military to use force against the crowd, the generals refused and instead told him he had to step aside.

One might think that all Americans would have supported the demand to stop the bloodshed. But Connecticut Sen. Chris Dodd threw a fit over Mr. Chávez's removal. The self-styled Latin America expert insisted that since Mr. Chávez had been initially "democratically elected" in a fair vote, he should have been immune from challenges to his power, no matter the abuses. To this day the senator calls the event a U.S.-backed coup, even though a State Department Inspector General's report found that the charge was false. Even the Organization of American States accepted the change in power.

Of course it wasn't a coup, U.S. backed or otherwise, as witnessed by the fact that while Mr. Chávez was removed from power, he was allowed to keep his cell phone, chat with Havana and negotiate his future. With the inadvertent help of the opposition, which acted incompetently, Mr. Chávez was back in office days later.

Why Bankruptcy Is the Best Option for GM – Michael E. LevineTo Prevent Bubbles, Restrain the Fed – Gerald P. O'Driscoll Jr.Democrats Shouldn't Rush on Labor Legislation – Ariella BernsteinThe circumstances of Mr. Chávez's political resurrection are still debated, but what is not in question is the reason Venezuelans had massed in the streets that day: They opposed the strongman's consolidation of power, which they warned would lead to dictatorship.

Fast forward six and a half years, and it turns out that the protestors were right.

Nearly all economic, judicial, electoral and congressional power in Venezuela is now in the hands of Mr. Dodd's "democratically elected" Chávez. Cuban doctors and teachers blanket the country, indoctrinating the poor. Cuban intelligence personnel are always on hand to support the Bolivarian Revolution while neighborhood gangs do the grass-roots work of enforcement. Political prisoners are rotting in Venezuelan jails without trials.

Being identified as a political opponent of the revolution is a ticket to the end of the unemployment line. Private property has zero protection under the law and the economy's private sector has been all but destroyed.

Mr. Chávez appears surprised that after a decade of repression, Venezuelans are still struggling to regain their liberty. But he is just as determined to retain control, and has made it clear he will not accept defeat at the polls. This is your "democratically elected" president, Sen. Dodd.

Chávez reopens oil bids to West as prices plungeBy Simon RomeroThursday, January 15, 2009CARACAS: President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again.

Until recently, Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases.

But faced with the plunge in prices and a decline in domestic production, senior officials here have begun soliciting bids from some of the largest Western oil companies in recent weeks  including Chevron, Royal Dutch/Shell and Total of France  promising them access to some of the world's largest petroleum reserves, according to energy executives and industry consultants here.

Their willingness to even consider investing in Venezuela reflects the scarcity of projects open to foreign companies in other top oil nations, particularly in the Middle East.

But the shift also shows how the global financial crisis is hampering Chávez's ideological agenda and demanding his pragmatic side. At stake are no less than Venezuela's economic stability and the sustainability of his rule. With oil prices so low, the longstanding problems plaguing Petróleos de Venezuela, the national oil company that helps keep the country afloat, have become much harder to ignore.

Embracing the Western companies may be the only way to shore up Petróleos de Venezuela and the raft of social welfare programs, like health care and higher education for the poor, that have been made possible by oil proceeds and have helped bolster his popular support.

"If re-engaging with foreign oil companies is necessary to his political survival, then Chávez will do it," said Roger Tissot, an authority on Venezuela's oil industry at Gas Energy, a Brazilian consulting company focusing on Latin America. "He is a military man who understands losing a battle to win the war."

While the new oil projects would not be completed for years, Chávez is already looking beyond the end of his current term in 2012 by putting forward a referendum, expected as early as next month, that would let him run for indefinite re-election.

In recent years, Chávez has preferred partnerships with national oil companies from countries like Iran, China and Belarus. But these ventures failed to reverse Venezuela's declining oil output. State-controlled oil companies from other nations have also been invited to bid this time, but the large private companies are seen as having an advantage, given their expertise in building complex projects in Venezuela and elsewhere in years past.

The bidding process was first conceived last year when oil prices were higher but Petróleos de Venezuela's production decline was getting impossible to overlook. Still, the process is moving into high gear only this month, with the authorities here expected to start reviewing the companies' bidding plans on new areas of the Orinoco Belt, an area in southern Venezuela with an estimated 235 billion barrels of recoverable oil. Altogether, more than $20 billion in investment could be required to assemble devilishly complex projects capable of producing a combined 1.2 million barrels of oil a day.

Chávez's olive branch to Western oil companies comes after he nationalized their oil fields in 2007. Two companies, Exxon Mobil and ConocoPhillips, left Venezuela and are still waging legal battles over lost projects.

But Venezuela may have little choice but to form new ventures with foreign oil companies. Nationalizations in other sectors, like agriculture and steel manufacturing, are fueling capital flight, leaving Venezuela reliant on oil for about 93 percent of its export revenue in 2008, up from 69 percent in 1998 when Chávez was first elected.

In the past year, with higher oil prices paving the way, Chávez also vastly expanded Petróleos de Venezuela's power, inextricably linking it to his political program. He directed the oil company to build roads, import and distribute food, build docks and shipyards and set up a light-bulb factory. He even expanded it into areas like milk production, soybean farming and the training of athletes after a weak performance at the Beijing Olympics.

One of the oil company's ventures sells subsidized food and extols Chávez's leadership at its stores across Venezuela. At one frenzied store in eastern Caracas, posters hung from the ceiling last Saturday showing Chávez arm in arm with children beneath the heading, "fortifying agrarian socialism."

Petróleos de Venezuela has also carried out nationalizations in other industries, absorbing companies like Electricidad de Caracas, the utility serving this city of five million. Top executives like Eulogio del Pino, the Stanford-educated vice president of exploration and production, spent much of 2008 negotiating unfinished deals like the takeover of a cement company.

But all the while, Petróleos de Venezuela has faced its own difficulties. It claimed it produced about 3.3 million barrels a day throughout most of 2008. But other sources like OPEC, of which Venezuela is a member, place the figure closer to 2.3 million and show a fall of about 100,000 barrels a day from a year earlier. When Chávez rose to power a decade ago, Venezuela was producing about 3.4 million barrels a day.

Rafael Ramírez, the energy minister and president of Petróleos de Venezuela, did not respond to requests for an interview. But energy executives here with contacts within Petróleos de Venezuela said Ramírez, a confidant of Chávez, has been waging a struggle within the company to refocus operations toward producing more oil.

After weathering the turmoil of recent years, Western oil companies here are loath to speak publicly about their plans. "We don't elaborate on bidding processes beyond the fact that we evaluate every opportunity and our decisions will be based on economics and other factors," said Scott Walker, a spokesman for Chevron.

But energy executives here speak with restrained optimism. Nineteen companies paid $2 million each last month for data on areas open for exploration, twice what such data costs elsewhere.

Oil companies say they recognize the risk of investing in Venezuela, given the country's abrupt shifts in the past. But they focus on the long-term potential of its petroleum reserves. Venezuela poses little risk in the search for oil since geologists have known for years where it lies in the Orinoco Belt.

Venezuela also differs from top oil nations like Saudi Arabia and Mexico, where national oil companies have monopolies. Petróleos de Venezuela let private companies remain as minority partners after the nationalizations, despite Chávez's often aggressive anticapitalist stance.

Moreover, foreign oil services companies like Halliburton, which has done business in Venezuela for 70 years, have even expanded their activities in the country as Petróleos de Venezuela grew more dependent on contractors to help extract oil from aging wells.

Still, doubts persist over the chances that the new bids, which are set to conclude in June, will ultimately result in finished oil projects. Risks of operating here were underscored again last week when Venezuela ordered new production cuts along with other OPEC members, impacting ventures with private partners.

Under the current bidding rules, the onus for financing the new projects lies with the foreign companies, even though Petróleos de Venezuela would maintain control. Banks might balk at such a prospect. Distrust also lingers in dealing with Petróleos de Venezuela.

"An agreement on a piece of paper means nothing in Venezuela because of the way Chávez abruptly changes the rules of the game," said a Venezuelan oil executive who has had dealings with oil companies from China, Russia and other countries.

"In 10 years, not one major oil project has been built in Venezuela," said the oilman, who asked not to be identified for fear of retribution. "Chávez has left his so-called strategic partners out to dry, like the Chinese, who have been given the same treatment as Exxon."

But the severity of the drop in oil prices may ultimately dictate the terms on which Venezuela re-engages with foreign oil companies.

"Chávez is celebrating the demise of capitalism as this international crisis unfolds," said Pedro Mario Burelli, a former board member of Petróleos de Venezuela. "But the irony is that capitalism actually fed his system in times of plenty," he said. "That is something Chávez will discover the hard way."

This tale reminds me of Soviet efforts to keep up with the technical Jones' back during the Cold War.

May 20, 2009The Mystery of the Venezuelan Satellite

By Adolfo FabregatVenezuela's "socialist satellite" is mostly a no-show when it comes to television broadcasts. Bad news for Hugo Chavez, and worse news for the Chinese, whose space program supplied it.

During the May 10th broadcast of his weekly show Aló Presidente, Hugo Chávez made a number of references to the show being broadcast via the "Satélite Simón Bolivar." Superimposed on the screens at home, Venezuelans saw the graphic "En Vivo Satélite Simón Bolivar".

But there was one problem; satellite watchers in Venezuela and Brazil noticed that the satellite was not broadcasting anything, let alone Aló Presidente. Where were the ground stations getting their signal from? A similar situation happened in the broadcast of the show the week before, May 3rd, so this time the watchers were ready. They scanned the neighbor satellite NSS806, the one normally used by most Venezuelan TV Stations, and there it was, the show was being broadcast the same way it had most Sundays for the last 10 years. The U$400 million satellite known in technical circles as VENESAT-1was a no-show as it has been since its launch by China October 29th 2008.

Satellite watchers, in what is known as the FTA Community (Free To Air or unencrypted broadcasts), is a fast growing group of amateurs scanning the geo synchronous satellites visible above their horizon, excited to find such varied programming as soccer games from Argentina, news from Iran or bullfights from Spain, in a way reminiscent of police scanners or ham radio operators.

The FTA Community gathers in internet forums mostly organized around the geographical areas of the satellites they can receive, to share information about what satellites may be broadcasting and to help each other troubleshoot reception problems.

It is in these forums that questions about the satellite operation began to emerge. One can follow a history of excitement early on when the VENESAT-1went live back in January to disappointment currently with the lack of any regularly available programming. Because the VENESAT-1 is not broadcasting with any regularity or quality, there isn't much commentary. Most of what is posted is about the, somewhat incomprehensibly, the only regularly schedule broadcast from the satellite: a Brazilian network on a backup transponder with no audio. Any broadcasts from Venezuelan networks are usually short, with pixilated images and of very low quality. Here is a sample of the comments:

Quote

Sadoun.net

Jose47: m getting VENESAT-1signal @60% Quality on trasnponder 11380 H 23030. I get five channels but only one has picture and no sound. I do not know why I can't get sound. Anyways, I live in West Palm Beach Fl.

BYX: Most of the times with some feeds palying in a loop the China olympics, last time I checked they had a brasilian channel with no audio.

FTA Testers

CarlosRamos: Hello friends, I've been trying since yesterday to tune to any signal in the ku band and can't get anything, in the C band i get VTV and ANTV and a Brazilian channel in the backup, I would like to know if anyone has tune any other channels.

But no one has been more dedicated to following the operation of VENESAT-1 as Venezuela's own Juan Perdomo Guerrero (email) who has been documenting his findings in a forum in the very popular Noticiero Digital newsite/forum. His post regarding the operation-condition of VENESAT-1 has become the most viewed ever, with over 350 thousands views, and the most commented with over 800 comments in little over 5 months.

Mr. Perdomo has recently edited the first page of the post to reflect a summary of all his findings because a large number, if not the majority, of the 800+ comments were insults directed at Mr. Perdomo from Chávez supporters who make a very political response to what is in essence a technical question, the satellite either works or it doesn't.

Unquestionably there is a political dimension to the condition of the satellite and that was made by Mr. Chávez and members of his administration who, like then Minister of Science and Technology Nuris Orihuela declared to the most influential Spanish newspaper, El País, that VENESAT-1is "a socialist satellite" , or as reported in Venezuela's state news agency ABN, the satellite will "serve for the construction of socialism" or that it proves the superiority of the socialist revolution as in this speech by Chávez himself and reported in his own TeleSur network:

Quote

If it wasn't for the socialist Revolution, China wouldn't have achieved the scientific and technological advances it posses today. China is a clear example that you do not need an empire to be a power.

For the average TV viewer at home it does not matter one bit whether the image is coming from a satellite or not, much less what specific satellite is being used. With now thousands of satellites in orbit and hundreds being launched every year, satellite failures no longer command front page news. But in the growing and competitive satellite industry, involving billion dollar investments in launch services, manufacturing services and ground equipment, it is a big deal to know if satellites have operational difficulties. So it is highly significant that no one in the industry has detected and reported problems with VENESAT's condition. There is a lot circumstantial evidence that the VENESAT-1 is not where it should be at this stage of it operational life.

A depreciating asset.

Beyond all the grand "socialist" objectives planned for VENESAT-1, one thing is certain, a satellite is a depreciating asset.

According to Minister Orihuela, described in this document of the Ministry of Science and Technology as also the Presidenta del Centro Espacial Venezolano, VENESAT-1 has a planned life of 12-15 years (180 months on the outside) and required an investment of U$240 million in manufacture and launch -- paid to China Great Wall Industry Corp. and another U$150 million in infrastructure like technical training and ground equipment in Venezuela.

Every month the VENESAT-1 depreciates some U$2.5 million, so one would expect that the proprietors of the satellite, the Venezuelan government, would want to make as productive use of those 180 months as possible. Ms. Orihuela herself in the previously linked interview describes the ongoing costs of Venezuela satellite for 24 state TV stations, 24 state radios, infocenters and national libraries as exceedingly high. Yet seven months after its launch very little visible use of the satellite has been detected, except for the TV graphics every time Mr. Chávez is on TV. An interesting comparison can be made with the satellite Star One C2, launched for Brazil last year by the European Space Agency on April 18th. By June 2nd, only six weeks after its launch, the Star One C2 was fully operational to the point that it totally replaced the ageing BrasilSatB4 in "the task of broadcasting the main Brazilian TV network channels".

LyngSat.com is an excellent Scandinavian operation that collects information from FTA satellite watchers around the world about what they find being broadcast in orbiting satellites in its different transponders and frequencies. It operates much like a Wikipedia but for FTA aficionados. In the case of VENESAT-1, lyngsat reports three TV stations, a frequency from the Ministry of Education and a couple of feeds. Even assuming that these were regularly produced broadcasts and not FTA reports intended to manipulate the public information, it is fair to say that is a very weak grid compared to dozens of stations in the aforementioned Star One C2 launched only a few months earlier.

To reinforce the point, assuming the lyngsat information about the VENESAT-1 is accurate, lyngsat still reports most Venezuelan TV stations broadcasting through NSS806.

The promises of VENESAT

The business site goliath.excnext.com links to a press release (full article by registration only) from CANTV, the state owned telephone, television and internet provider with the following digest:

Quote

Venezuela-based state-owned telecom service provider CANTV commenced its services through the nation's Simón Bolivar (Venesat-1) satellite on January 10, according to a government statement. CANTV will deliver high-speed Internet, satellite-based telephony, and television services to remote regions. The government...

The article is dated January 1st. As far as anyone knows none of these services are in currently in operation.

On January 7th 2009, CANTV published in its website (still there as of this writing) this report about the upcoming (January 10th) transfer of control of the VENESAT-1from Chinese technicians to Venezuelan.

The most striking aspect of the report is that the two officials mentioned and pictured , Minister of Science and Technology Nuris Orihuela and Minister of Telecomunications and Information Socorro Hernández have both been relieved of their duties, Ms Orihuela on April 9th and Ms Hernández just last week, May 13th

Except for the linked article, the CANTV website appears to have been purged of any references to the VENESAT.

Commenting on the recent changes of personnel within the administration, the widely popular and respected Venezuelan web site The Devil's Excrement on May 15th described VENESAT-1as "...the worthless Chinese satellite, ..."

What about Uruguay?

Because Venezuela's assigned orbital slot could not reach as many potential users as he wanted, Chávez negotiated with Uruguay, whose assigned slot at 78 degrees west could provide coverage from the Eastern US all the way down to the top portion of Argentina, to cede its slot in exchange for 10% of the available use of the satellite.

The agreement, signed during a meeting of Mercosur countries in Montevideo in December 2005, requires Venezuela to pay all the costs related to the transfer of property of the orbital slot with the International Telecommunications Union and to pay for all the infrastructure costs in Uruguay including a ground station in the town of Manga, in the outskirts of Montevideo, as well as the training of technical operators.

For Uruguay, that otherwise could not afford to make use of its orbital slot, the deal seemed to make sense, as it could bring significant savings in satellite services. The deal was approved by Uruguay's Congress, but not without a number of voices of concern from members of the opposition parties that did not fully trust Chávez would use the satellite solely for the advertised intended purposes.

Four years after the agreement was signed and seven months after the satellite was launched there is nothing to show for in Uruguay and not even significant mentions of the satellite in the press.

There was however, this report from El Observador on May 10th under the curious headline "Uruguay will start to utilize its satellite by the end of the year", while at the same time reporting that the initiation of the U$500 thousand ground station could not be celebrated "con bombos y platillos" (fanfare) during Chávez visit to the region on May 15th because the work is "delayed", although no reason is given as to why or for how long. Even more intriguing the article alludes to the imminent visit to Montevideo of Minister Socorro Hernández to begin the process, but if there is one thing we can really be certain of is that Socorro Hernández will not be visiting Montevideo any time soon.

The checkered history of the DFH4

VENESAT-1 was launched on October 29th 2008; fourteen days later, November 12th, China Great Wall Industry Corp. confirmed that the NIGCOMSAT-1, a satellite that shared the same core technology known as DongFangHong-4 (DFH4) with VENESAT-1 and launched 18 months earlier on behalf of the government of Nigeria, was completely lost.

VENESAT-1 and NIGCOMSAT-1 also share the same DFH4 technology with SINOSAT-2, launched in 2006, ostensibly to provide additional communications capabilities for the 2008 Peking Olympics. The SINOSAT-2 was confirmed totally lost within a couple of weeks after its launch. Gunther's Space Page reports of the 10 launched or planned DFH4 based satellites, nine were either lost, cancelled or delayed with VENESAT accounting for the tenth.

Satellite journalist Peter J. Brown concludes, in this thorough and exhaustive analysis of the impact of the loss of NIGCOMSAT to the Chinese satellite industry, if the loss of the NIGCOMSAT-1 had occurred a couple of weeks earlier, the launch of the VENESAT-1 would most likely had been postponed.

Both lost satellites appeared to have suffered electrical problems caused by failed or damaged solar arrays and this is what Mr. Perdomo, who has been monitoring and recording his findings, thinks also has happened to VENESAT. In an email from Venezuela he shares this opinion:

Quote

"When VENESAT-1 deployed its solar panels it must have lost control because it took more than four months to reach its operational position. Then they started putting channels in the satellite on C band and feeds on Ku band that were reported to Lyngsat and registered, 3 channels on C band, and feeds on Ku (never reconfirmed), they also started some testing for C band internet and sensor reading on Ka band for PDVSA [Venezuela's Oil Company], by then they were trying to get whatever they could from it to keep the deception as long as possible. They changed the story in the official media, avoiding any reference to the services they could no longer offer specifically DBS (direct to home broadcasting on the Ku band) and telemedicine, education act, that originally were the justification for the program. Uruguay must have known about these problems and postponed the investment for a useless control center.

The Venezuelan channels should be on the VENESAT-124/7 like they are now on NSS 806. The Aló Presidente transmissions you mention are just fakes to keep the lie, this is proven beyond any doubt. At the moment not even feeds are there, just the spurious signal in the backup transponder from the Brazilian station meant for satellite Star One C2 that although 8 degrees away shares the same frequencies. The intent to produce transmissions deteriorated the satellite beyond any hope of recovery, and this is the situation since April 9. This stage could last for months; I have no way of predicting exactly how long, NIGCOMSAT still has some juice during the day."

How will this story unfold?

No one wants to see a communications satellite that could provide so many beneficial services fail. On the other hand it is fair to say that so far VENESAT-1 has been a less than stellar performer and the track record of the DFH4-based satellites does not inspire much confidence that it will improve in the future.

If there were absolutely no problems with the satellite, why it is taking so long to come up to speed?

But if there are problems, the implications for both the Chinese and Venezuelan governments are immense.

For Mr. Chávez the humiliation that the object that represents the superiority of his revolution failed is going to be a hard pill to swallow. For the Chinese, the stakes are even higher: the reputation of their satellite program, a commercial enterprise with national security implications.

I don't launch satellites but I do fix my plumbing when it leaks. I have always liked to do minor repairs around the home. A coupe of years ago I had a problem with my kitchen sink. To solve the problem I bought some Chinese made galvanized pipe fittings at a local hardware store. I didn't bother to examine the fittings at the store, after all, what could possibly be bad about them, regular, conventional, low tech galvanized pipe, no big deal.

Until I tried to use them, that is. What CRAP! Utter CRAP! The galvanized finish utterly destroyed by the careless use of a pipe wrench and the thread so badly cut that it was impossible to make a watertight connection. I threw them in the trash bin and went out to buy some non-socialist pipe fittings probably made by the Empire.

If the Chinese can't even make low tech pipe fittings and if they poison babies with melamine in the edible products, it is not strange at all that they can't make a functional satellite.

Chavez and his 21st Century Socialism is destroying my country, there is no doubt about it. I don't really care if the satellite works or not, it is used to disseminate socialist lies and to spread the hate that Chavez uses to remain in control. But Chavez has destroyed PDVSA, the source of 80% of our foreign currency. While he is willfully destroying private enterprise, he is also killing the goose that used to lay Venezuela's golden eggs. He is destroying the source of his own funding. Only an utter idiot would do something like that. All that he has left is the gift of the gab.

Mind you, the previous supposedly democratic governments didn't pave my street either. It had grown so full of potholes that you could almost do slalom practice by trying to avoid them. The holes got to be so famous that we have them names, the names of current office holders, of course.

A curious phenomenon happens with Latin American Governments. After they've been in power some time they discover that a good way to earn bribes is by handing out contracts for the building or repair of infrastructure. Not only that, it gives them an excuse to put up huge billboards telling us how marvelous they are, building for democracy, socialism or whatever happens to be in vogue. These billboards often tout the amount of money being spent for our benefit. Of course, they never says that its our money in the first place.

WHILE THE United States and Venezuela's neighbors silently stand by, Hugo Chávez's campaign to destroy his remaining domestic opposition continues. On Thursday night state intelligence police raided the Caracas offices of Guillermo Zuloaga, the president of the country's last independent broadcast network, Globovision. They claimed to be looking for evidence of irregularities in the car dealership that Mr. Zuloaga also runs. In fact this was a thinly disguised escalation of an attack that Mr. Chávez launched this month against Globovision. The channel has been officially accused of "inciting panic," based on its accurate reporting of a mild May 4 earthquake in Caracas; under the regime's draconian media control law it could be shut down. Few doubt that that is Mr. Chávez's intent: Two years ago he revoked the license of the country's most popular television network after a similarly trumped-up campaign.

To recap: In February Mr. Chávez eliminated the limit on his tenure as president after a one-sided referendum campaign that included ugly attacks on Venezuela's Jewish community. Since then he has imprisoned or orchestrated investigations against most of the country's leading opposition figures, including three of the five opposition governors elected last year. The elected mayor of Maracaibo, who was the leading opposition candidate when Mr. Chávez last ran for president, was granted asylum in Peru last month after authorities sought his arrest on dubious tax charges. The National Assembly, controlled by Mr. Chávez, is considering legislation that would eliminate collective bargaining and replace independent trade unions with "worker's councils" controlled by the ruling party. Another new law would eliminate foreign financing for independent non-government groups.

This is hardly the first time that a Latin American caudillo has tried to eliminate peaceful opponents: Mr. Chávez is following a path well worn by the likes of Juan Perón and Alberto Fujimori -- not to mention his mentor, Fidel Castro. But this may be the first time that the United States has watched the systematic destruction of a Latin American democracy in silence. As Mr. Chávez has implemented the "third phase" of his self-styled revolution, the Obama administration has persisted with the policy of quiet engagement that the president promised before taking office.

"We need to find a space in which we can actually have a conversation, and we need to find ways to enhance our levels of confidence," Assistant Secretary of State Thomas A. Shannon Jr. said two weeks ago, echoing earlier remarks by Secretary of State Hillary Rodham Clinton. We have no objection to dialogue with Mr. Chávez. But isn't it time to start talking about preserving independent television stations, opposition political leaders, trade unions and human rights groups -- before it is too late?

[05-22-09] Venezuelan politics never seems to touch bottom. This time, it might have. Venezuela has lived through so many ups and downs since Hugo Chavez came to power ten years ago that such tribulations no longer matter much. What does truly matter is the conviction, increasingly held today in and out of Venezuela, that Hugo Chavez has ignominiously betrayed the hope he once inspired in many. He appears to command still enough allegiance as to keep up appearances. Yet, the increasingly evident truth for friend and foe is that he has turned out to be a fraud, such as Venezuela had left behind several generations ago and had hoped would never witness again.

Where did Hugo Chavez fail? In retrospect, it might be said that he tried to change Venezuela in too many ways, in too short a time, and in a far too unilateral manner. It can be said that he tried to do so for the wrong reasons and in pursuit of the wrong goals. It could be said that he had a golden chance to give Venezuela a badly needed new opportunity on the strength of extravagantly high revenues. Yes. But today it can also be said that the simple truth is that he missed such an opportunity and that all that is left is the unfulfilled hopes created by his unbridled demagoguery, blatant disregard of the common will and misguided believes in a personal Utopia.

Furthermore, as Venezuela begins to understand the scale of the disaster it will have to deal with when the dust settles, it can already be said that Hugo Chavez willfully ruined a nation in his unrepentant ambition to shape Venezuela’s history and destiny according to the delusions of his delirious mind.

But that is not all. As the symptoms of a systemic crisis loom large over Venezuela’s political, social and economic prospects, Hugo Chavez has increasingly taken refuge in the ultimate subterfuge of failed politicians and erratic would-be tyrants: his will is the law. His convictions must per force be those of every Venezuelan, and dissent must be ignored, hidden or quashed.

What others might say or think is no longer of any consequence. What Venezuelans might believe, wish or cherish, is of no significance. The only destiny worthy of Venezuela is Hugo Chavez’s will. The ‘Bolivarian Revolution’ is simply his will. Is Venezuela to follow him blindly? As current events show, hopes and frustrations as large as those Hugo Chavez has given life to cannot coexist together for long. Judging by the Venezuelan president’s recent statements – of which we present a selection in our Video Section “Hugo Chavez in his Own Words” - he feels confident that the powers he holds and the numbness created by widespread corruption will settle the issue in his favor and that he will continue to be able to sow misery under the banner of a Utopia only he can lead the way to. Time will tell.

“We don’t want Venezuela to become a totalitarian communist state,” declared Peruvian novelist Mario Vargas Llosa yesterday in Caracas at the opening of a major conference organized by the market-liberal think tank, CEDICE. I’m in Venezuela this week with my Cato colleagues Juan Carlos Hidalgo and Gabriela Calderon to participate in the event and to run a seminar for 60 students and young leaders from Venezuela, which took place earlier this week.

Vargas Llosa’s concern is not about some remote possibility. Nor is it the opinion of an isolated intellectual detached from reality. His comments received sustained applause from the over-flow crowd of the 600 people in attendance and he has been mobbed by the press since he arrived here yesterday. Venezuela is not yet a full fledged dictatorship, evidenced by the fact that we are meeting here with leading liberal intellectuals from the region. But the environment of intolerance, arbitrary rule, and state vilification of anybody who disagrees with Hugo Chavez’s march toward socialism has worsened at an alarming rate in recent months.

Already, Chavez has centralized economic and political control to a degree unmatched anywhere in the hemisphere outside of Cuba. He controls the legislature, the supreme court, the military, the central bank, the national electoral council, much of the media, the state oil monopoly and thus virtually all government spending, and exerts tremendous influence over the private sector through regulatory measures, most especially capital controls.

Freedom of speech is coming under renewed attack. Wednesday was the two-year anniversary of the government’s decision to shut down the independent RCTV (by refusing to renew its license)—until then the country’s largest television station. It was the closing of RCTV that sparked mass protests led by the Venezuelan student movement that culminated in the defeat in December 2007 of Chavez’s proposed constitutional referendum that would have turned the country into a socialist state. Since then, the opposition has won major victories in leading cities and states and Chavez has had to deal with the steep drop in the price of oil, the source of his astronomical spending. Chavez´s response has included the marginalization of elected opposition politicians by depriving them of most of their funding and appointing parallel officials to carry out local government functions with full funding; the imposition by law of many of the measures rejected in the constitutional referendum; a rash of further nationalizations and land confiscations; and threats to close Globovision TV, the only remaining independent television station in the country.

The extent and technological sophistication of state propaganda here is impressive and chilling. Numerous state television stations operate 24 hours a day, relying on a diversity of formats (talk shows, music videos, interviews, “news” programs, congressional “debates,” etc.), praising the Chavez regime, and attacking the private sector. The programming is not just pro-government. It is explicitly Marxist through and through. There is endless talk about the effort to create a “new socialist man.” Those of us who have come to defend basic freedom in Venezuela have been individually and institutionally labeled on state television as imperialists and agents of the CIA. Currently and ironically, there is a government campaign against the “hegemony” of the private press and “media terrorism”—otherwise known in civilized countries as freedom of the press. The state intellectuals are discussing the lack of social responsibility of the private press and one channel carries congressional debates on the subject. The other day the government raided the house of the president of Globovision and accused him of violating the law in business dealings unrelated to the television station. This is being used as further proof of the existence of a vast “mafia” led by the “oligarchy.” Last night Mario Silva, the Goebbels of Venezuela, openly called on his television show for the closing of Globovision on the grounds that the station has misled and insulted the Venezuelan people for far too long and that enough is enough. I could go on but you get the picture. And this is only TV. The government finances marches, concerts and rallies, and pro-Chavez party propaganda on billboards, government buildings, public squares, etc. throughout the city and the country.

As was posted earlier, we co-sponsored a three-day Cato seminar on classical liberal thought for 60 Venezuelan students earlier this week with CEDICE that the national guard, an education ministry official and state TV interrupted in an effort to shut the event down. Their reasons for doing so were ludicrous—they accused us of setting up a university without permission. When we explained that it was a seminar that only uses the name university in the title, they then said we were engaging in false advertising and thus were still breaking the law. Fortunately, we had immediately called Globovision who immediately began reporting the incident as it occurred. I think Globovision’s role played no small part in pressuring government officials to leave. The government tried to intimidate us and provoke us into reacting aggressively, which we did not do. (Ironically, my Argentinean colleague, Professor Martin Krause, was giving a lecture at our seminar on the importance of civil society at the time of the government’s harassment.) For weeks, state media had been reporting that we were setting up a camp to train young Venezuelans in subversive tactics to overthrow the Chavez regime. This has then been discussed at length on state television by commentators, intellectuals, etc. Later I watched on Mario Silva’s program how they covered the incident showing footage that supposedly showed how we were openly flouting Venezuelan law in a number of ways. Later the same day, the authorities detained Peruvian intellectual Alvaro Vargas Llosa for three hours upon his arrival at the airport as he was headed to the Cato-CEDICE seminar, finally letting him go and informing him that he could not discuss political issues. Here again Globovision played a key role. It began reporting the events at airport as they happened, which were in turn immediately reported throughout the Latin American press.

This is an increasingly polarized and tense society. But it is also true that Chavez must rely extensively on force and deception to promote his socialist project. His personal popularity has sunk under 50 percent in recent weeks (support for his policies are even lower) and he is becoming more radical. The CEDICE conference has been filled with especially inspiring and moving speeches, particularly from the Venezuelans. Some of them–like RCTV president Marcel Granier or Oscar Garcia Mendoza, president of a leading bank that has never done business with government—are heroes of freedom, putting their own fortunes and personal liberty at risk in openly challenging the regime. They have the admiration of all freedom lovers here. They deserve all the support they can get in a battle that is only going to get tougher.

Global Security: Radical chic hit its zenith in Europe Monday as Venezuelan despot Hugo Chavez strolled the red carpet to adoring crowds at the Venice Film Festival — just as he was plotting with Iran to destroy the West.

It was the thuggish Venezuelan dictator's moment of glory, just two days after thousands of Latin Americans bitterly marched against him in "No Mas Chavez" demonstrations on Friday.

The humiliation of that was over when the film industry crowds at the Venice premiere of Oliver Stone's "South of the Border" heaved forward to touch his clothes and the paparazzi begged him for his autograph. Not since the days of the Beatles has slavering from the thousands gone on like this.

See, Hugo's a movie star now, with Stone creating a propaganda film in his honor, just as Leni Riefenstahl did for Adolf Hitler.

Based on the film's trailer and Stone's own statements, the film emphasizes that the public has it all wrong about the clowning Chavez being a threat to the West. It's merely an image problem he has, brought on by unjust demonization from George W. Bush.

Security threat? What security threat? Pay no attention to those Middle Eastern and Colombian terrorists with Venezuelan passports — Hugo Chavez, after all, has created day care centers.

It's a particularly dangerous line of propaganda to be spewing these days. Outside Chavez's appearance in Venice, one wonders if the film crowds realized that Chavez is also on what he calls an "axis of evil" tour, forging deadly links with regimes as brutal as his own — or worse. As he smiled and waved to the Venetian crowds, playfully kissing a reporter after borrowing her camera, he was taking action on more serious fronts to try to take the West down.

A day earlier in Tehran, Chavez announced a "strategic" move to sell $800 million in gasoline to Iran, vowing to ship 20,000 barrels a day in exchange for Iranian "tractors." Sound innocuous? It isn't.

Chavez knows exactly what he's doing. Iran imports 40% of its gasoline and is vulnerable to sanctions on that vital commodity. For all the oil Iran produces, it lacks refinery capacity and must make up for its internal shortage with imports. Shutting off the gasoline spigot from the West is the mullahs' worst fear, given the damage it would do to Iran's economy as well as their grip on power.

That means gasoline is the one of the few points of leverage the West has over the Iranian regime as it seeks to check Iran's nuclear program. If Chavez's scheme succeeds, the West will have a potential economic weapon removed. Chavez's gasoline means the mullahs in charge should have nothing to fear from a shut-off.

This will give Tehran room for a more aggressive push to develop nuclear weapons to threaten the West. Amazingly enough, the first target for nuclear blackmail will likely be Europe, where Chavez once strode the red carpet to applause in Venice.

We should all be concerned. A nuclear-armed Iran will be the one with leverage. Once it gets the bomb, the West will have two choices: accept it and the resulting spread of nuclear know-how to terrorist groups and rogue states, including Venezuela; or go to war.

By his move to supply Iran with gasoline, Chavez ends the peaceful middle ground of gasoline sanctions.

Chavez plainly stated that this was his aim — over the weekend, he said Iran had "a right" to develop its nuclear program and that all the talk about Iran building a bomb should be discounted because there was "no proof."

If radical chic, which Tom Wolfe wrote of in the 1970s, was the self-destructive propensity of the privileged elites to sidle up to predators trying to kill them, what went on in Venice amounts to an intensified modern version of that very same decadence.

The Emerging Axis of Iran and Venezuela The prospect of Iranian missiles in South America should not be dismissed.

By ROBERT M. MORGENTHAU The diplomatic ties between Iran and Venezuela go back almost 50 years and until recently amounted to little more than the routine exchange of diplomats. With the election of Iranian President Mahmoud Ahmadinejad in 2005, the relationship dramatically changed.

Today Mr. Ahmadinejad and Venezuelan President Hugo Chávez have created a cozy financial, political and military partnership rooted in a shared anti-American animus. Now is the time to develop policies in this country to ensure this partnership produces no poisonous fruit.

Signs of the evolving partnership began to emerge in 2006, when Venezuela joined Cuba and Syria as the only nations to vote against a U.N. Atomic Energy Agency resolution to report Iran to the Security Council over its failures to abide U.N. sanctions to curtail its nuclear program. A year later, during a visit by Mr. Chávez to Tehran, the two nations declared an "axis of unity" against the U.S. and Ecuador. And in June of this year, while protesters lined the streets of Tehran following the substantial allegations of fraud in the re-election of Mr. Ahmadinejad, Mr. Chávez publicly offered him support. As the regime cracked down on political dissent, jailing, torturing and killing protesters, Venezuela stood with the Iranian hard-liners.

View Full ImageAssociated Press Hugo Chávez and Mahmoud Ahmadinejad meet in Tehran, Sept. 5..Meanwhile, Iranian investments in Venezuela have been rising. The two countries have signed various Memoranda of Understanding on technology development, cooperation on banking and finance, and oil and gas exploration and refining. In April 2008, the two countries also signed a Memorandum of Understanding pledging full military support and cooperation. United Press International reported in August that Iranian military advisers have been embedded with Venezuelan troops.

According to a report published by the Carnegie Endowment for International Peace in December of last year, Venezuela has an estimated 50,000 tons of unmined uranium. There is speculation in the Carnegie report that Venezuela could be mining uranium for Iran.

The Iranians have also opened International Development Bank in Caracas under the Spanish name Banco Internacional de Desarrollo C.A., an independent subsidiary of Export Development Bank of Iran. Last October the U.S. Department of the Treasury's Office of Foreign Assets Control imposed economic sanctions against both of these Iranian banks for providing or attempting to provide financial services to Iran's Ministry of Defense and its Armed Forces Logistics—the two Iranian military entities tasked with advancing Iran's nuclear ambitions.

My office has been told that that over the past three years a number of Iranian-owned and controlled factories have sprung up in remote and undeveloped parts of Venezuela—ideal locations for the illicit production of weapons. Evidence of the type of activity conducted inside the factories is limited. But we should be concerned, especially in light of an incident in December 2008. Turkish authorities detained an Iranian vessel bound for Venezuela after discovering lab equipment capable of producing explosives packed inside 22 containers marked "tractor parts." The containers also allegedly contained barrels labeled with "danger" signs. I think it is safe to assume that this was a lucky catch—and that most often shipments of this kind reach their destination in Venezuela.

A recent U.S. Government Accountability Office (GAO) study reported a high level of corruption within the Venezuelan government, military and law enforcement that has allowed that country to become a major transshipment route for trafficking cocaine out of Colombia. Intelligence gathered by my office strongly supports the conclusion that Hezbollah supporters in South America are engaged in the trafficking of narcotics. The GAO study also confirms allegations of Venezuelan support for FARC, the Colombian terrorist insurgency group that finances its operations through narcotics trafficking, extortion and kidnapping.

In a raid on a FARC training camp this July, Colombian military operatives recovered Swedish-made anti-tank rocket launchers sold to Venezuela in the 1980s. Sweden believes this demonstrates a violation of the end-user agreement by Venezuela, as the Swedish manufacturer was never authorized to sell arms to Colombia. Venezuelan Interior Minister Tareck El Aissami, a Venezuelan of Syrian origin, lamely called the allegations a "media show," and "part of a campaign against our people, our government and our institutions."

In the past several years Iranian entities have employed a pervasive system of deceitful and fraudulent practices to move money all over the world without detection. The regime has done this, I believe, to pay for materials necessary to develop nuclear weapons, long-range missiles, and road-side bombs. Venezuela has an established financial system that Iran, with the help of Mr. Chávez's government, can exploit to avoid economic sanctions.

Consider, for example, the United Kingdom bank Lloyds TSB. From 2001 to 2004, on behalf of Iranian banks and their customers, the bank admitted in a statement of facts to my office that it intentionally altered wire transfer information to hide the identity of its clients. This allowed the illegal transfer of more than $300 million of Iranian cash despite economic sanctions prohibiting Iranian access to the U.S. financial system. In January, Lloyds entered into deferred prosecution agreements with my office and the Justice Department to resolve the investigation.

In April, we also announced the indictment of a company called Limmt, and its manager, Li Fang Wei. The U.S. government had banned Limmt from engaging in transactions with or through the U.S. financial system because of its role in the proliferation of weapons of mass destruction to Iran. But our investigation revealed that Li Fang Wei and Limmt used aliases and shell companies to deceive banks into processing payments related to the shipment of banned missile, nuclear and so-called dual use materials to subsidiary organizations of the Iranian Defense Industries Organization. (Limmt, through the international press, has denied the allegations in the indictment.) The tactics used in these cases should send a strong signal to law enforcement, intelligence agencies, and military commands throughout the world about the style and level of deception the Iranians' employ. Based on information developed by my office, we believe that the Iranians, with the help of Venezuela, are now engaged in similar sanctions-busting schemes.

Why is Hugo Chávez willing to open up his country to a foreign nation with little shared history or culture? I believe it is because his regime is bent on becoming a regional power, and is fanatical in its approach to dealing with the U.S. The diplomatic overture of President Barack Obama in shaking Mr. Chávez's hand in April at the Summit of the Americas in Trinidad and Tobago is no reason to assume the threat has diminished. In fact, with the groundwork laid years ago, we are entering a period where the fruits of the Iran-Venezuela bond will begin to ripen.

That means two of the world's most dangerous regimes, the self-described "axis of unity," will be acting together in our backyard on the development of nuclear and missile technology. And it seems that terrorist groups have found the perfect operating ground for training and planning, and financing their activities through narco-trafficking.

The Iranian nuclear and long-range missile threats, and creeping Iranian influence in the Western Hemisphere, cannot be overlooked. My office and other law-enforcement agencies can help ensure that money laundering, terror financing, and sanctions violations are not ignored, and that criminals and the banks that aid Iran will be discovered and prosecuted. But U.S. law enforcement alone is not enough to counter the threat.

The public needs to be aware of Iran's growing presence in Latin America. Moreover, the U.S. and the international community must strongly consider ways to monitor and sanction Venezuela's banking system. Failure to act will leave open a window susceptible to money laundering by the Iranian government, the narcotics organizations with ties to corrupt elements in the Venezuelan government, and the terrorist organizations that Iran supports openly.

Mr. Morgenthau is the Manhattan district attorney. This op-ed is adapted from a speech yesterday at the Brookings Institution in Washington, D.C.

This could have gone in the water thread but looked to me like it exposes more weaknesses of the ruler and his governing competence. I thought that under fascism-socialism you give up your freedoms but the trains run on time. Solution is easy - ration service, blame the rich. Sounds familiar. Speaking of rich, I wonder if the Presidential 'Palace' has its water service rationed...

Residents of the Venezuelan capital face cuts in water service for as much as 48 hours per week, after the government imposed rationing to stem a 25 percent shortfall in the city's supply, officials said Monday.

Officials said cuts in water service were to be staggered throughout Caracas through the duration of the current dry season, which is not expected to end until May 2010.

Amazing photos, Denny. I wondered what part of this is natural disaster - drought - and what part is failed public leadership. My thought is that poor countries often lack safe drinking water, but Venezuela is/was oil rich in a time of record oil prices. If they did not build sufficient water infrastructure with their confiscated wealth, whether it should have been more reservoirs, rain capturing, purification, pipelines or desalination, then it was human failure.

FYI for Chavez, swimming pools do not actually destroy water, nor do showers or toilets.

Al Gore has a company with waterless urinals. Chavez could look into that. Maybe their mutual friend Obama could hook them up.

Obama in this situation would blame it on Bush, but Chavez with his endless term-stretching has no predecessor to blame anymore.

Amazing photos, Denny. I wondered what part of this is natural disaster - drought - and what part is failed public leadership. My thought is that poor countries often lack safe drinking water, but Venezuela is/was oil rich in a time of record oil prices. If they did not build sufficient water infrastructure with their confiscated wealth, whether it should have been more reservoirs, rain capturing, purification, pipelines or desalination, then it was human failure.

Lack of water has been a perennial problem for Caracas. I'm not an expert on the subject but it seems to me that the Caracas valley is too small to catch enough rainwater for the current population. La Mariposa reservoir is just one of several that service Caracas. I believe there are two or three "systems" that bring water from further south. The water that reaches our homes is drinkable having been treated and chlorinated but it does have a lot of silt at times.

In Venezuela we have a dry season and a wet season. Officially the wet season is May to November so it is hard to blame the season for the lack of water. Our problem is quite clear, lack of maintenance, which is not exclusive to the waterworks but present in every government initiative. To be fair, this is not a novelty with Mr. Chavez, lack of maintenance has been emblematic of ALL our governments far back as I can remember. We build but we do not keep things up.

Denny, that was all very helpful. Besides the bay bridge issues, I was thinking of New Orleans and Katrina, and we had a bridge collapse here with design failure, I-35 Mpls that I drove over twice the day it fell. For 'safety' our highway dept had an automatic spraying system of corrosive salts onto under-designed gusset plates. (Soon they will also run health care.) So it is very fair to say public infrastructure problems are not unique to Chavez, but also fair to note that in all his power and wealth confiscation he did not successfully address the most obvious, crucial, 380 year old problem during his time.

I live where water is plentiful, but heat required to live here year round is threatened by a government that simultaneously thwarts nuclear energy while declaring all other real sources a pollutant.

Here's one from the Department of We Are The World: Hugo Chávez and Mahmoud Ahmadinejad will address the U.N.'s climate summit in Copenhagen. Say what you will about these two gentlemen—the support for terrorists, the Holocaust denial, the suppression of civil liberties—at least nobody can accuse them of being global warming "deniers."

On the contrary, the two leaders, who met in Caracas last month for at least the 11th time, have been nothing if not cooperative when it comes to environmentally friendly and carbon-neutral technologies. Bicycles, for instance: In 2005, Chávez directed his government to "follow seriously the project of manufacturing Iranian bicycles in Venezuela." An Iranian dairy products plant (no doubt ecologically sensitive) also set up shop hard on the Colombian border, in territory controlled by Colombia's terrorist FARC.

Ahmadinejad and Chávez: A new document sheds light on this radioactive relationship.

Then there was the tractor factory Iran built in Ciudad Bolivar. In January, the Associated Press reported that Turkish authorities had seized 22 containers going to Venezuela from Iran labeled "tractor parts." What they contained, according to one Turkish official, "was enough to set up an explosives lab."

But perhaps the most interesting Iranian venture is a supposed gold mine not far from Angel Falls, in a remote area known as the Roraima Basin. The basin straddles Venezuela's border with neighboring Guyana, where a Canadian company, U308, thinks it has found the "geological look-alike" to Canada's Athabasca Basin. The Athabasca, the company's Web site adds, "is the world's largest resource of uranium."

In 2006, Chávez publicly mocked suspicions of nuclear cooperation with Iran, saying it "shows they have no limit in their capacity to invent lies." In September, however, Rodolfo Sanz, Venezuela's minister of basic industries, acknowledged that "Iran is helping us with geophysical aerial probes and geochemical analyses" in its search for uranium.

The official basis for this cooperation seems to be a Nov. 14, 2008 memorandum of understanding signed by the two countries' ministers of science and technology and given to me by a credible foreign intelligence source. "The two parties agreed to cooperate in the field of nuclear technology," reads the Spanish version of the document, which also makes mention of the "peaceful use of alternative energies." Days later, the Venezuelan government submitted a paper to the International Atomic Energy Agency on the "Introduction of a Nuclear Power Programme." (Online readers can see the memoranda for themselves in their Farsi and Spanish versions. One mystery: The Farsi version makes no mention of nuclear cooperation.)

Iran would certainly require large and reliable supplies of uranium if it is going to enrich the nuclear fuel in 10 separate plants—an ambition Ahmadinejad spelled out last month. It would also require an extensive financial and logistical infrastructure network in Venezuela, not to mention unusually good political connections. All this it has in spades.

OpinionJournal Related Stories: Mary O'Grady: Revolutionary Anti-Semitism Robert M. Morgenthau: The Emerging Axis of Iran and Venezuela Warren Kozak: The Missiles of October .Consider financing. In January 2008, the Bank of International Development opened its doors for business in Caracas. At the top of its list of its directors, all of whom are Iranian, is one Tahmasb Mazaheri, former governor of the central bank of Iran. As it turns out, the bank is a subsidiary of the Export Development Bank of Iran, which in October 2008 was sanctioned by the U.S. Treasury Department for providing "financial services to Iran's Ministry of Defense and Armed Forces Logistics."

Or consider logistics. For nearly three years, Venezuelan airline ConViasa has been flying an Airbus 340 to Damascus and Tehran. Neither city is a typical Venezuelan tourist destination, to say the least. What goes into the cargo hold of that big plane is an interesting question. Also interesting is that in October 2008 the Islamic Republic of Iran Shipping Lines, also sanctioned by Treasury, announced it had established a direct shipping route to Venezuela.

Finally, there are the political connections. What do Fadi Kabboul, Aref Richany Jimenez, Radwan Sabbagh and Tarek Zaidan El Aissami Maddah have in common? The answer is that they are, respectively, executive director for planning of Venezuelan oil company PdVSA; the president of Venezuela's military-industrial complex; the president of a major state-owned mining concern; and, finally, the minister of interior. Latin Americans of Middle Eastern descent have long played prominent roles in national politics and business. But these are all fingertip positions in what gives the Iranian-Venezuelan relationship its worrying grip.

Forty-seven years ago, Americans woke up to the fact that a distant power could threaten us much closer to home. Perhaps it's time Camelot 2.0 take note that we are now on course for a replay.